When the real wage is above the level that equilibrates supply and demand:

Question

Quizplus · Accepted Answer

When the real wage is above the level that equilibrates supply and demand, it means that the wage rate is too high and there are more workers willing to work than there are jobs available. This results in a surplus of labor, which is another way of saying that the quantity of labor supplied exceeds the quantity of labor demanded. This leads to unemployment as not all workers who want a job can find one. Therefore, option A is the correct choice.

When the Real Wage Is Above the Level That Equilibrates