If an American teenager will work for $5 an hour and an employer is willing to pay that wage, but the minimum wage is $7.25 an hour and the employer is not willing to pay that much, the teenager goes unemployed and the market experiences:

Question

Quizplus · Accepted Answer

The minimum wage law prevents the teenager and employer from agreeing on a wage below $7.25, resulting in lost gains from trade since both parties would have benefited from the employment at $5 an hour.

If an American Teenager Will Work for $5 an Hour