One effect of a minimum wage in the market for low-skilled labor is
A) a shortage of low-skilled labor.
B) a surplus of low-skilled labor.
C) no effect in the market for low-skilled labor.
D) an increase in demand for low-skilled labor.

Question

Quizplus · Accepted Answer

When a minimum wage is established in the market for low-skilled labor, it raises the wage rate above equilibrium causing a surplus of low-skilled labor as more people seek those jobs than employers are willing to hire. This creates a situation of unemployment or underemployment among low-skilled workers. Therefore, the effect of a minimum wage in the market for low-skilled labor is a surplus of low-skilled labor.

One Effect of a Minimum Wage in the Market for Low-Skilled