If the minimum wage is set at a level above the equilibrium wage:

Question

Quizplus · Accepted Answer

If the minimum wage is above the equilibrium wage, it will create a surplus of labor (more people willing to work at that wage than there are jobs available). This can lead to employers decreasing the number of workers they employ, which could result in unemployment. Therefore, option C is the best choice. Options A and B are incorrect because a minimum wage above the equilibrium wage will have an impact on the labor market, and it will not be a nonbinding minimum wage.

If the Minimum Wage Is Set at a Level Above