-The graph shows the labor market for fast-food workers in Sioux City.If the government sets a minimum wage of $7 an hour,then the labor market is ________,and marginal benefit ________ marginal cost.
A) inefficient; is less than
B) inefficient; equals
C) efficient; equals
D) inefficient; is greater than
E) inefficient; cannot be compared to

Question

-The graph shows the labor market for fast-food workers in Sioux City.If the government sets a minimum wage of $7 an hour,then the labor market is ________,and marginal benefit ________ marginal cost.
A) inefficient; is less than 
B) inefficient; equals 
C) efficient; equals 
D) inefficient; is greater than 
E) inefficient; cannot be compared to

Quizplus · Accepted Answer

Setting a minimum wage above the equilibrium wage creates a surplus of labor (unemployment), making the market inefficient. The marginal benefit of hiring an additional worker is less than the marginal cost, as employers are forced to pay more than the equilibrium wage.

-The Graph Shows the Labor Market for Fast-Food Workers in Sioux