Suppose the equilibrium wage is $10 an hour.A minimum wage is a price ________ and that will change the quantity of employment if it is set at ________ an hour.

Question

Quizplus · Accepted Answer

A minimum wage is a price floor, meaning it sets a minimum price that employers must pay their workers. Setting the minimum wage above the equilibrium wage of $10 an hour will increase the cost of labor for employers and may cause them to hire fewer workers or reduce their hours, thus changing the quantity of employment. Setting the minimum wage at $12 an hour is the only option that meets this criterion.

Suppose the Equilibrium Wage Is $10 an Hour