Question

When a minimum wage is set above the equilibrium wage​ rate, _______. A. unemployment increases B. unemployment decreases C. job search activity decreases D. the supply of workers decreases

Answer 1

Answer:A

Explanation:equilibrium wage rate is the point where employees are hired up to the point where extra cost of hiring an employee is equal to the extra sales revenue from selling their output,if wages is now set above this wage rate,it means more the on ground employees will earn more and there won't be enough to hire more employees, this will in turn provoke unemployment

Answer 2

Answer: Option A

Explanation: An increase in the minimum wage will lead to corresponding decrease in the amount of labour (employment will reduce) because most firm want to increase their profit (profitability) and still maintain morality among their employees. The more the government increase minimum wage, the more people who is looking for job even when there is non. Due to minimum wage increase, firm will higher less and this will bring a falling down of the demand of labour curve.