Which of the following is a correct statement about a minimum wage law?
A) It reduces costs for employers.
B) It ensures that anyone who wants a job can get a job with a high enough wage.
C) It causes prices to rise as producers pay more for labor.
D) It is a price ceiling law that makes wages higher than the market equilibrium price.
E) It is a price floor law that forces wages to be lower than the market equilibrium price.

Question

Quizplus · Accepted Answer

A minimum wage law sets a minimum price that employers must pay their workers. Since labor is a cost to producers, an increase in the minimum wage law will increase their cost of production, which they may pass along to the consumers in the form of higher prices. Thus, Choice C is the only correct statement among the given choices. Choice A is incorrect because a minimum wage law increases costs for employers. Choice B is incorrect because a minimum wage law does not guarantee employment for anyone who wants a job. Choice D is incorrect because a price ceiling law sets a maximum price that consumers can pay, not a minimum wage that employers must pay. Choice E is incorrect because a price floor law sets a minimum price that consumers must pay, not a minimum wage that employers must pay.

Which of the Following Is a Correct Statement About a Minimum