Question

A minimum wage that is set above a market's equilibrium wage will result in an excess:________.

a. demand for labor, that is, unemployment.
b. supply of labor, that is, a shortage of workers.
c. demand for labor, that is, a shortage of workers.
d. supply of labor, that is, unemployment.

Answer 1

D

Step-by-step explanation:

A minimum wage set above market's equilibrium wage increases the cost of hiring labour. so the demand of labour falls.

A minimum wage that is set above a market's equilibrium wage increases the income that would be earned by labour, so the supply of labour increases.

Because the increased supply for labour would not be matched with a corresponding increase in demand, there would be unemployment