If a minimum wage is set above the free-market equilibrium wage in a competitive labour market,the labour market will experience an increase in wages and

Question

Quizplus · Accepted Answer

If the minimum wage is set above the free-market equilibrium wage, it will create a surplus of labour, meaning that there will be more workers willing to work at that wage than there are jobs available. This will lead to an increase in unemployment, as employers will have to lay off workers or not hire new ones in order to comply with the minimum wage law. Therefore, the correct answer is B.

If a Minimum Wage Is Set Above the Free-Market Equilibrium