Assume that a minimum wage is created and imposed above the equilibrium wage in an otherwise perfectly competitive labor market.Which of the following will NOT occur as a result of this new law?

Question

Quizplus · Accepted Answer

The imposition of a minimum wage above the equilibrium wage leads to a decrease in the demand for labor and an increase in the supply of labor. As a consequence, the unemployment rate will rise, and the quantity of labor seeking jobs will increase. However, the level of employment will not increase, as employers will hire fewer workers at the higher wage rate. Therefore, option C is not correct.

Assume That a Minimum Wage Is Created and Imposed Above