If the minimum wage is currently above the equilibrium wage,then a decrease in the minimum wage
A)increases both the quantity demanded and the quantity supplied of labor.
B)decreases both the quantity demanded and the quantity supplied of labor.
C)increases the quantity of labor demanded but decreases the quantity of labor supplied.
D)decreases the quantity of labor demanded but increases the quantity of labor supplied.

Question

Quizplus · Accepted Answer

When the minimum wage is above the equilibrium wage, it creates a surplus of labor (unemployment). A decrease in the minimum wage moves it closer to the equilibrium, increasing the quantity of labor demanded (as employers are willing to hire more at lower wages) and decreasing the quantity of labor supplied (as fewer workers are willing to work at lower wages).

If the Minimum Wage Is Currently Above the Equilibrium Wage,then