If the minimum wage is set above the market wage,
A)the quantity of labour supplied will be below the quantity of labour demanded.
B)unemployment will rise.
C)highly-skilled workers will have a harder time finding jobs.
D)frictional unemployment will increase.
E)All of the above are correct.

Question

Quizplus · Accepted Answer

When the minimum wage is set above the market wage, it creates a surplus of labor, which means there will be more people looking for jobs than there are jobs available. As a result, employers may need to lay off workers, reduce hours or even close their businesses. This leads to an increase in unemployment. The other options are not necessarily true when the minimum wage is set above the market wage.

If the Minimum Wage Is Set Above the Market Wage