A minimum wage that is set above a market's equilibrium wage will result in
A) an excess demand for labor, that is, unemployment.
B) an excess demand for labor, that is, a shortage of workers.
C) an excess supply of labor, that is, unemployment.
D) an excess supply of labor, that is, a shortage of workers.

Question

Quizplus · Accepted Answer

When the minimum wage is set above the equilibrium wage, it leads to an excess supply of labor because more workers are willing to work at the higher wage, but employers hire fewer workers, resulting in unemployment.

A Minimum Wage That Is Set Above a Market's Equilibrium