Which of the following is true,holding all other things constant,when comparing regions that impose a higher minimum wage to regions that impose a lower minimum wage?
A) In regions with the highest minimum wage,most of the jobs require low skills,and workers are not productive enough to get paid the higher wage.
B) In regions with the lowest minimum wage,most of the jobs require technical skills and no one works minimum-wage jobs.
C) In regions with the lowest minimum wage,the price control is nonbinding; in the regions with the highest minimum wage,the price control is binding.
D) In regions with the lowest minimum wage,the price control is binding; in the regions with the highest minimum wage,the price control is nonbinding.
E) In regions with the highest minimum wage,the minimum wage law is legally enforced; in regions with the lowest minimum wage,the law is not strongly enforced.

Question

Quizplus · Accepted Answer

In economic terms, a price control becomes binding when it is set above the equilibrium price, causing a surplus or shortage. For minimum wage, if it is set above the market-clearing level (where supply meets demand), it becomes binding, leading to potential unemployment or labor surplus. Conversely, if the minimum wage is below the equilibrium, it's nonbinding, as the market wage is naturally higher. Thus, in regions with a higher minimum wage, the control is more likely to be binding, affecting employment and wages, while in regions with a lower minimum wage, the control is nonbinding, allowing market forces to dictate wages.

Which of the Following Is True,holding All Other Things Constant,when