Minimum wage laws cause unemployment because the legal minimum wage is set
A)below the market wage,causing labor demand to be greater than labor supply.
B)below the market wage,causing labor demand to be less than labor supply.
C)above the market wage,causing labor demand to be greater than labor supply.
D)above the market wage,causing labor demand to be less than labor supply.

Question

Quizplus · Accepted Answer

When the legal minimum wage is set above the market wage, it creates a situation where labor demand is less than labor supply. Employers are willing to hire fewer workers at the higher wage rate, while more workers are willing to supply their labor at that wage rate. This leads to unemployment, as there are more workers willing to work than there are jobs available.

Minimum Wage Laws Cause Unemployment Because the Legal Minimum Wage