Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.
-The imposition of a minimum wage in the unskilled labor market creates labor surplus or unemployment.

Question

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. 
-The imposition of a minimum wage in the unskilled labor market creates labor surplus or unemployment.

Quizplus · Accepted Answer

When a minimum wage is imposed in a market, it sets a wage floor above the equilibrium wage rate. This leads to an excess supply of labor or unemployment as the quantity of labor supplied exceeds the quantity demanded. Therefore, statement A is true.

​Figure 53

Figure 53