A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to
A) clear the market for unskilled workers.
B) increase the number of unskilled workers employed.
C) increase the number of firms in those industries where the law is effective.
D) reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers.
E) all of the above

Question

Quizplus · Accepted Answer

A minimum wage law that sets the minimum wage above the equilibrium wage will lead to an excess supply of unskilled labor. This means that there will be more workers willing to work at the minimum wage than there are jobs available. As a result, some workers will not be able to find employment or their hours may be reduced. Therefore, it will reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers. The other choices are not likely outcomes of a minimum wage law.

A Minimum Wage Law (That Sets the Minimum Wage Above