It is generally accepted that a binding minimum wage does NOT:
A) decrease the quantity of labor demanded.
B) increase unemployment.
C) increase the amount of labor supplied.
D) decrease the amount of labor supplied.

Question

Quizplus · Accepted Answer

A binding minimum wage sets the floor price for labor above the equilibrium price, which can lead to an excess supply of labor (more people are willing to work at the higher wage than there are jobs available). This does not decrease the amount of labor supplied; in fact, it might increase it as more people are attracted to the higher wage, although it can decrease the quantity of labor demanded by employers and increase unemployment due to the higher cost of hiring.

It Is Generally Accepted That a Binding Minimum Wage Does