If a minimum wage is introduced that is above the equilibrium wage rate,
A) the supply of labour increases and the supply of labour curve shifts rightward.
B) job-search activity increases.
C) unemployment decreases because more workers accept jobs at the higher minimum wage rate.
D) the quantity of labour demanded increases.
E) the quantity of labour supplied decreases because of the increase in unemployment.

Question

Quizplus · Accepted Answer

When a minimum wage is set above the equilibrium wage, it creates a surplus of labor, leading to increased job-search activity as more workers are willing to work at the higher wage, but fewer jobs are available.

If a Minimum Wage Is Introduced That Is Above the Equilibrium