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-(Figure: The Minimum Wage) Use Figure: The Minimum Wage.Which point on the y-axis is a binding minimum wage?

Question

Use the following to answer questions: -(Figure: The Minimum Wage)Use Figure: The Minimum Wage.Which point on the y-axis is a binding minimum wage? A) P₁ B) P₂ C) P₃ D) 0

Quizplus · Accepted Answer

Point C (P₃) is the binding minimum wage because it is above the equilibrium wage rate (where the supply and demand curves intersect) and will result in a surplus of labor (unemployment). The other points on the y-axis are either below or at the equilibrium wage rate, so they would not be binding. The point at 0 represents no minimum wage.

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