If the labor market worked efficiently, then an effective minimum wage law would:

Question

Quizplus · Accepted Answer

An effective minimum wage law, set above the equilibrium wage, would cause unemployment by creating a surplus of labor (more people willing to work at that wage than there are jobs available), hold wages higher than the equilibrium price (by legally setting the minimum wage above what the market would naturally determine), and help those who are employed at that price by ensuring they receive a wage higher than the market would otherwise offer.

If the Labor Market Worked Efficiently, Then an Effective Minimum