If, for any reason, the wage is held above the competitive equilibrium wage,
A) The quantity of labour supplied will exceed the quantity of labour demanded and there will be unemployment.
B) Unions will likely strike and the wage will fall to equilibrium.
C) The quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage.
D) The quality of workers in the applicant pool will tend to fall.

Question

Quizplus · Accepted Answer

If the wage is held above the competitive equilibrium wage, it means that the wage rate is higher than what the market is willing to pay. This will lead to an excess supply of labour, as more workers will be willing to work at the higher wage rate than what employers are willing to pay. As a result, the quantity of labour supplied will exceed the quantity of labour demanded and there will be unemployment.

If, for Any Reason, the Wage Is Held Above the Competitive