In a perfectly competitive labor market,the minimum wage policy adopted by the government raises employment.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, the wages are determined by the market supply and demand forces. If the government imposes a minimum wage, it creates a price floor above the market equilibrium wage rate. This causes an excess supply of labor, leading to a decrease in employment as employers hire fewer workers at the higher wage rate. Therefore, the minimum wage policy does not raise employment in a perfectly competitive labor market.

In a Perfectly Competitive Labor Market,the Minimum Wage Policy Adopted