-To be effective in raising people's wages, a minimum wage must be set
A) equal to the equilibrium wage rate.
B) below the equilibrium wage rate.
C) below $7.
D) above the equilibrium wage rate.
E) either above or below the equilibrium wage depending on whether the supply curve of labour shifts rightward or leftward in response to the minimum wage.

Question

-To be effective in raising people's wages, a minimum wage must be set
A) equal to the equilibrium wage rate. 
B) below the equilibrium wage rate. 
C) below $7. 
D) above the equilibrium wage rate. 
E) either above or below the equilibrium wage depending on whether the supply curve of labour shifts rightward or leftward in response to the minimum wage.

Quizplus · Accepted Answer

To effectively raise people's wages, a minimum wage must be set above the equilibrium wage rate. This ensures that the lowest legal wage is higher than what the market would naturally settle at, thereby increasing the income of workers at the bottom of the wage scale.

-To Be Effective in Raising People's Wages, a Minimum Wage