Question

If the minimum wage is set above the market equilibrium wage, a. All of the above are correct. b. highly-skilled workers will have a harder time finding jobs. c. unemployment will rise. d. the quantity of labor supplied will be below the quantity of labor demanded.

Answer 1

(C). Unemployment will rise

Step-by-step explanation:

Minimum wage is the lowest amount that can be paid to an employee for performing a job and paying below this amount is illegal.

Market equilibrium wage is the amount companies are willing to pay workers taking on new jobs, when the market is in equilibrium (when demand equals supply).

Setting the minimum wage above the market equilibrium wage will mean that more people will be available to take jobs, while companies will reduce the amount of people they hire if they are to keep their wage costs constant.

As such, "unemployment will increase", and demand for labor reduces and goes below the quantity of labor supplied.

Answer 2

Answer: The correct answer is "c. unemployment will rise.".

Explanation: If the minimum wage is set above the market equilibrium wage, unemployment will rise.

When the minimum wage is set above the market equilibrium salary, the amount of work offered is greater than the amount demanded. The result is unemployment.