Because the minimum wage is a ___________________ a surplus of workers exists and _________________ is created.
A)price ceiling; inflation
B)price ceiling; unemployment
C)price floor; inflation
D)price floor; unemployment

Question

Quizplus · Accepted Answer

A price floor is a minimum wage, which sets a wage floor above the equilibrium wage rate. This creates a surplus of workers (i.e. more people willing to work than there are available jobs) since employers will demand fewer workers at the higher wage rate, while at the same time, more workers will be willing to supply their labor at that wage rate. The surplus of workers results in increased unemployment.

Because the Minimum Wage Is a ___________________ a Surplus of Workers