As a result of establishing a legal minimum wage above the market clearing wage
A) there will be a shortage of workers.
B) firms will hire fewer workers.
C) firms will hire more workers.
D) fewer workers will want to work.

Question

Quizplus · Accepted Answer

When a legal minimum wage is established above the market clearing wage, it artificially raises the cost of labor for firms. Firms may not be able to afford to hire as many workers at this higher wage rate, so they will likely hire fewer workers as a result. This can lead to higher unemployment rates and a smaller workforce. There may not necessarily be a shortage of workers, but rather a shortage of job opportunities for workers.

As a Result of Establishing a Legal Minimum Wage Above