Suppose that the equilibrium wage rate in an industry is $10 per hour.The government then sets a minimum wage of $12 per hour.The result will be a surplus of labour supply.

Question

Quizplus · Accepted Answer

When the minimum wage is set above the equilibrium wage rate, it creates a surplus of labor supply because more people are willing to work at the higher wage rate, but fewer employers are willing to hire at the higher cost. This leads to unemployment or excess supply of labor.

Suppose That the Equilibrium Wage Rate in an Industry Is