If the minimum wage is a binding price floor:
A)those who want to work will outnumber the jobs available.
B)the market-clearing equilibrium wage will increase.
C)there will be a job for everyone who is willing to work.
D)business owners will hire more workers.

Question

Quizplus · Accepted Answer

When the minimum wage is a binding price floor, it means that it is set above the market equilibrium wage. This leads to an excess supply of labor, meaning that there are more workers willing to work than there are jobs available. Therefore, option A is the correct answer. Option B is incorrect because the market-clearing equilibrium wage will not increase, as the minimum wage is already set higher. Option C is incorrect because there will not be a job for everyone who is willing to work; only those who can find a job despite the excess supply of labor will be employed. Option D is also incorrect because business owners may actually hire fewer workers due to the higher labor costs associated with the minimum wage.

If the Minimum Wage Is a Binding Price Floor