Question

Assume that the labor market for retail workers is generally unskilled. If a minimum wage is set in the labor market for retail workers and that this minimum wage is above the equilibrium wage in this particular labor market, then __________ . Select the correct answer below: there will be a shortage of retail workers in this labor market there will be a surplus of retail workers in this labor market. there will be a non-binding price floor there will be a non-effective minimum wage

Answer 1

there will be a surplus of retail workers in this labor market.

Step-by-step explanation:

In the attached diagram the scenario is illustrated.

When the minimum wage is above the equilibrium wage it means that the minimum wage is above what employees are willing to pay workers. So employees will be less wiling to pay this amount.

There will be a reduction in the number of available slots for workers.

On the other hand workers will receive higher wage than they expected but since the slots for work are now limited there will be a surplus of labour in the market