For a legislated minimum wage to be binding in a competitive labour market,it must be set
A)below the free-market wage.
B)equal to the free-market wage.
C)above the free-market wage.
D)at or below the free-market wage.
E)such that no worker can earn more than the established minimum wage.

Question

Quizplus · Accepted Answer

A legislated minimum wage set above the free-market wage would be binding as it ensures that no workers are paid less than the minimum wage, even in a competitive labour market where employers may attempt to pay workers lower wages. Setting it at or below the free-market wage (choices A and D) would not be as effective in ensuring fair wages for workers. Setting it equal to the free-market wage (choice B) may not provide enough protection for workers who may be earning less than the minimum wage due to factors such as discrimination or lack of bargaining power. Choice E is not a feasible option as it would violate basic labour laws and workers' rights.

For a Legislated Minimum Wage to Be Binding in a Competitive