If, for any reason, the wage is held above the competitive equilibrium wage,
A)the quantity of labour supplied will exceed the quantity of labour demanded and there will be unemployment.
B)unions will likely strike and the wage will fall to equilibrium.
C)the quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage.
D)the quality of workers in the applicant pool will tend to fall.

Question

Quizplus · Accepted Answer

If the wage is held above the competitive equilibrium wage, employers will demand less labor and workers will supply more. This results in a surplus or unemployment. Therefore, choice A is correct. Choices B, C, and D are not necessarily true in this situation.

If, for Any Reason, the Wage Is Held Above the Competitive