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

Question

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When a minimum-wage law sets wages above the equilibrium level, it typically increases the quantity of labor supplied and reduces the quantity of labor demanded, leading to a surplus of labor or unemployment.

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