The effect of a legal minimum wage set above the equilibrium wage rate is
A) an excess quantity of labor demanded.
B) an excess quantity of labor supplied.
C) an increase in the quantity of labor demanded.
D) a decrease in quantity of labor supplied.

Question

Quizplus · Accepted Answer

Setting a legal minimum wage above the equilibrium wage rate creates an excess quantity of labor supplied, as more people are willing to work at the higher wage rate than employers are willing to hire at that rate. This results in unemployment or underemployment for some workers.

The Effect of a Legal Minimum Wage Set Above the Equilibrium