Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour.A minimum wage law that creates a price floor of $8.50 an hour leads to
A) a surplus of lifeguards in Houston.
B) a shortage of lifeguards in Houston.
C) no changes in the lifeguard market.
D) a change in the quantity of lifeguards supplied but no change in the quantity of lifeguards demanded.
E) an increase in the number of lifeguards employed.

Question

Quizplus · Accepted Answer

A minimum wage law setting a price floor above the equilibrium wage creates a surplus because the higher wage attracts more workers than employers are willing to hire at that wage.

Suppose the Current Equilibrium Wage Rate for Lifeguards in Houston