If a minimum wage is introduced that is above the equilibrium wage rate,
A) the quantity of labor demanded increases.
B) job search activity increases.
C) the supply of labor increases and the supply of labor curve shifts rightward.
D) unemployment decreases because more workers accept jobs at the higher minimum wage rate.
E) the quantity of labor supplied decreases because of the increase in unemployment.

Question

Quizplus · Accepted Answer

When a minimum wage is set above the equilibrium wage, it creates a surplus of labor, leading to increased job search activity as more workers are willing to work at the higher wage, but fewer jobs are available.

If a Minimum Wage Is Introduced That Is Above the Equilibrium