The federal minimum wage in 2010 was $7.25. If this wage rate was less than the equilibrium wage, what is the effect?
A) The minimum wage does not create unemployment.
B) The number of people who want to work at the minimum wage is the same as the number of available jobs.
C) The number of people who want to work at the minimum wage is greater than the number of available jobs.
D) Deadweight loss exists.

Question

Quizplus · Accepted Answer

If the minimum wage is below the equilibrium wage, it does not affect the labor market, meaning it does not create unemployment or a surplus of labor.

The Federal Minimum Wage in 2010 Was $7