Suppose the market clearing wage for unskilled workers is $6.50 per hour. If the government sets a minimum wage at $8.00 per hour,:

Question

Quizplus · Accepted Answer

Setting a minimum wage above the market clearing wage creates a surplus of labor, as the quantity of labor supplied by workers exceeds the quantity of labor demanded by employers at the higher wage. This leads to higher unemployment among unskilled workers, as employers hire fewer workers at the increased wage rate.

Suppose the Market Clearing Wage for Unskilled Workers Is $6