If the minimum wage is set above the equilibrium wage,then
A) more people will work than at the equilibrium wage.
B) the same number of people will work as at the equilibrium wage.
C) fewer people will want to work than at the equilibrium wage.
D) there will be fewer labor hours purchased by employers than at the equilibrium wage.
E) none of the above

Question

Quizplus · Accepted Answer

If the minimum wage is set above the equilibrium wage, this means that it is now higher than what the market would naturally determine as the wage rate. As a result, employers will demand fewer labor hours at the higher wage rate than they would at the equilibrium wage. This is because the increased cost of labor means that employers will have to pay more per hour of work, and may therefore choose to hire fewer workers or reduce the number of hours worked by their existing employees to keep costs down. The result is fewer labor hours purchased by employers than at the equilibrium wage.

If the Minimum Wage Is Set Above the Equilibrium Wage,then