A minimum wage set above the equilibrium wage rate is a price _______ that _______ the quantity of low- skilled labour demanded.

Question

Quizplus · Accepted Answer

A minimum wage set above the equilibrium wage rate acts as a price floor, not a ceiling, because it sets the lowest legal price that can be paid for labor. By setting this minimum wage above the equilibrium, it typically decreases the quantity of low-skilled labor demanded because employers are less willing or able to hire at the higher wage rate.

A Minimum Wage Set Above the Equilibrium Wage Rate Is