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

Question

Quizplus · Accepted Answer

When the minimum wage is set above the equilibrium wage rate, it creates a surplus of labor or unemployment. Employers are unable or unwilling to hire as many workers, leading to an increase in unemployment.

When a Minimum Wage Is Set Above the Equilibrium Wage