Figure 5.2. The figure shows the supply and demand curves of a firm.
-Which of the following is true?
A)If minimum wage is set below the equilibrium wage, it leads to a labor surplus.
B)If anything interferes with the voluntary exchanges that make up a market, equilibrium does not occur.
C)Minimum wage helps deal with the problem of unemployment in the market for unskilled labor.
D)Producers are willing to employ more labor at a minimum wage.
E)Minimum wage leads to a situation of labor deficit in a market.

Question

​Figure 5.2. The figure shows the supply and demand curves of a firm. 
-Which of the following is true?​
A)​If minimum wage is set below the equilibrium wage, it leads to a labor surplus. 
B)​If anything interferes with the voluntary exchanges that make up a market, equilibrium does not occur. 
C)​Minimum wage helps deal with the problem of unemployment in the market for unskilled labor. 
D)​Producers are willing to employ more labor at a minimum wage. 
E)​Minimum wage leads to a situation of labor deficit in a market.

Quizplus · Accepted Answer

This follows from the definition of market equilibrium, which occurs when the quantity demanded equals the quantity supplied through voluntary exchange. Any interference with this exchange will disrupt the equilibrium. Choices A, C, D, and E are incorrect because they either contradict basic economic principles or are not directly related to the information in the figure provided.

​Figure 52

Figure 52