When a minimum-wage law forces the wage to remain above the level that balances supply and demand,it raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level.

Question

Quizplus · Accepted Answer

When the minimum-wage law sets a wage above the equilibrium level, it creates a surplus of labor, as more people supply their labor than employers demand. This implies that the quantity of labor supplied increases and the quantity of labor demanded decreases, leading to a potential increase in unemployment.

When a Minimum-Wage Law Forces the Wage to Remain Above