Final answer:
The false statement is that the market value of a good determines wages, as wages are influenced by various factors including employee productivity and minimum wage laws, not directly by the market value of goods.
Step-by-step explanation:
The statement that is false is: 'The market value of a good determines wages.' This statement is not accurate because wages are typically determined by factors such as employee productivity, the quality of goods or services provided, minimum wage laws, and price floors, but not directly by the market value of a single good. Minimum wage laws set a legal lower bound for wages, which, when binding, can create a surplus of labor if set above the equilibrium wage.
However, if the minimum wage is set below the equilibrium level and is thus nonbinding, it does not affect employment levels because wages are determined by the supply and demand for labor. A price floor, like a minimum wage, sets a minimum price that can be legally charged for a good or service. When the minimum wage is raised significantly above the equilibrium wage, it can reduce the quantity of labor demanded, potentially leading to unemployment.