A minimum wage, set above the market equilibrium wage, will create an excess supply of labour.

Question

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When the minimum wage is set above the market equilibrium wage, it creates a situation where the supply of labour exceeds the demand. This results in an excess supply of labour, commonly known as unemployment. Employers may not be able to afford to hire as many workers at the higher wage, leading to an increase in unemployment.

A Minimum Wage, Set Above the Market Equilibrium Wage, Will