Final answer:
An increase in the minimum wage above the equilibrium wage creates more unemployment if the supply and demand for labor are very inelastic.
Step-by-step explanation:
An increase in the minimum wage above the equilibrium wage creates more unemployment if the supply and demand for labor are A. very inelastic.
When the supply and demand for labor are very inelastic, it means that the quantity of labor demanded and supplied is not very responsive to changes in wages. In this case, if the minimum wage is increased above the equilibrium wage, there will be more people willing to work at the higher wage, but fewer jobs available. This leads to unemployment.
For example, if the minimum wage is increased to $15 per hour and the demand for labor is not very responsive to this increase, there may be more workers willing to work at $15 per hour than there are jobs available, resulting in unemployment.