Setting the minimum wage above the equilibrium wage:

Question

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Setting the minimum wage above the equilibrium wage can cause unemployment because employers may not be willing to hire as many workers as before if they must pay higher wages. This can lead to a surplus of labor, resulting in some workers being unemployed. Option A is incorrect because raising the minimum wage will have an effect on the market, but it may not be visible if the wage is already at or above the equilibrium level. Option B is incorrect because if the minimum wage is above the equilibrium wage, it will be binding and affect the market.

Setting the Minimum Wage Above the Equilibrium Wage