A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to
A)clear the market for unskilled workers.
B)increase the number of unskilled workers employed.
C)increase the number of firms in those industries where the law is effective.
D)reduce the number of unskilled workers employed and\or reduce the number of hours worked by unskilled workers.

Question

Quizplus · Accepted Answer

A minimum wage law that sets the minimum wage above the equilibrium wage will create a surplus of unskilled workers, as more workers will be willing to work at the higher wage than there are jobs available. As a result, employers will have to choose from a larger pool of workers, and some workers will end up not getting a job or losing their jobs. This will reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers. The other options are unlikely outcomes of a minimum wage law.

A Minimum Wage Law (That Sets the Minimum Wage Above