A minimum wage that is set below the equilibrium wage will:
A) cause increased unemployment.
B) have no effect on employment.
C) cause the overall wage to increase.
D) cause the overall wage to decrease.
E) create more jobs.

Question

Quizplus · Accepted Answer

A minimum wage set below the equilibrium wage will have no effect on employment because the market wage is already above the minimum wage, so it does not constrain the wage-setting process.

A Minimum Wage That Is Set Below the Equilibrium Wage