Question

Choose the point on the graph that shows an excess supply of labor at minimum wage.

Answer 1

The point on the graph that shows an excess supply of labor at minimum wage is marked in purple. It is the point where wages are $18 and the number of labor supplied is 45.

What is Excess Supply of Labour?

Please note that the refers to the supply of labor over and above that which is demanded in the market.

It can occur when the minimum wage goes above the equilibrium wage.

In economics, this condition usually leads to a fall in wages.

Please see the link below for more about Excess Supply of Labour:

Answer 2

The correct answer is the following: "the excess supply of labor due to minimum wage is represented at price level= $18 (min wage), where the amount of workers supplied (45) exceeds the amount demanded (18) in 27 employees".

A minimum wage is a price restriction established by the economic authorities. It does not allow the price in the labor market to fluctuate under a certain limit. When the minimum wage is located above the equilibrium price, it generates an excess supply situation, therefore, there is more people willing to work than employers willing to hire them. The difference is of 27 individuals that will remained unemployed.