A minimum wage set above the equilibrium wage
A) decreases the deadweight loss in the market.
B) decreases the workers' surplus because workers must spend resources looking for jobs.
C) increases the firm's surplus.
D) increases the market's efficiency.
E) has no effect on the market.

Question

Quizplus · Accepted Answer

Setting a minimum wage above the equilibrium wage creates a surplus of labor, meaning there are more workers looking for jobs than there are available jobs. This results in workers having to spend more resources, such as time and money, looking for jobs. Therefore, the workers' surplus decreases.

A Minimum Wage Set Above the Equilibrium Wage