-The above figure shows a labour market with a minimum wage of $8 an hour. The deadweight loss equals the
A) distance ab.
B) area abc.
C) distance ad.
D) area acd.
E) area bad.

Question

-The above figure shows a labour market with a minimum wage of $8 an hour. The deadweight loss equals the
A) distance ab. 
B) area abc. 
C) distance ad. 
D) area acd. 
E) area bad.

Quizplus · Accepted Answer

The deadweight loss in a labor market with a minimum wage is represented by the area of the triangle that forms between the supply and demand curves due to the imposition of the minimum wage. This area represents the loss in economic efficiency where there are both job losses (unemployment) and unmet employer demand. In this case, the correct representation is the area abc, which captures the inefficiency introduced by the minimum wage setting.

-The Above Figure Shows a Labour Market with a Minimum