If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?
A) An increase in quantity of unskilled labor demanded.
B) A decrease in the quantity of unskilled labor supplied.
C) A shortage of unskilled labor.
D) A surplus of unskilled labor (unemployment).

Question

Quizplus · Accepted Answer

When the minimum wage is increased above the market equilibrium, the wage rate becomes too high and leads to a surplus of unskilled labor, which results in unemployment. Therefore, there will be a surplus of unskilled labor (unemployment) in the labor market.

If an Increase in the Government-Imposed Minimum Wage Pushes the Price