When the prevailing market wage is above equilibrium,we say:

Question

Quizplus · Accepted Answer

When the prevailing market wage is above equilibrium, it means wages are too high for the number of available jobs, and therefore there is unemployment. This also means that there is a surplus of labor, as workers are willing to supply more labor than is demanded by employers at the high wage rate. So, the quantity of labor demanded is less than the quantity supplied, leading to a situation where there is both unemployment and a surplus of labor.

When the Prevailing Market Wage Is Above Equilibrium,we Say