Question

Minimum-wage laws and unions are similar to each other but different from efficiency wages in that minimum-wage law and unions

a. cause unemployment, but efficiency wages do not.
b. cause the quantity of labor supplied to exceed the quantity of labor demanded, but efficiency wages do not.
c. cause wages to be above the equilibrium level.
d. prevent firms from lowering wages in the presence of a surplus of workers.

Answer 1

The correct answer is D

Step-by-step explanation:

Minimum wage is the remuneration which is the lowest that the employers could legally pay to their workers. In short, the price or remuneration which is below that the workers could sell their labor.

Unions and laws support the minimum wages as the higher amount of the minimum wage result in decrease or fall in the job opportunities of the applicants who are low skilled . And few workers wants to hire them so that they will not be able to demand the better working conditions.

So, it is different from the efficiency wages in the minimum wages because it prevent the firms or the companies from lowering the wages in the presence of the surplus of the workers.