-A minimum wage set above the equilibrium wage rate creates
A) inefficiency because it creates excessive employment.
B) efficiency because few workers lose their jobs.
C) efficiency because workers can earn a living wage.
D) inefficiency and a deadweight loss.
E) efficiency because it increases most workers' wages.

Question

-A minimum wage set above the equilibrium wage rate creates
A) inefficiency because it creates excessive employment. 
B) efficiency because few workers lose their jobs. 
C) efficiency because workers can earn a living wage. 
D) inefficiency and a deadweight loss. 
E) efficiency because it increases most workers' wages.

Quizplus · Accepted Answer

Setting a minimum wage above the equilibrium wage rate can lead to inefficiency and a deadweight loss because it may result in unemployment (excess supply of labor) and a mismatch between the quantity of labor demanded and supplied.

-A Minimum Wage Set Above the Equilibrium Wage Rate Creates