What would be associated with the type of unemployment created by the minimum-wage law?
A) Cam quits his job in a grocery store because he would rather work in landscaping.
B) Wayne decides to close his Thai restaurant because he cannot afford to pay workers the going wage.
C) In hopes of earning a higher income, Lucas goes back to school to become an electrician.
D) Nicole pays the workers for her auto mechanics business more than the equilibrium wage because she believes it will make them work harder.

Question

Quizplus · Accepted Answer

The minimum-wage law, by definition, sets a floor on wages that employers can pay their workers. This means that if the minimum wage is raised above the market equilibrium wage, some employers will be unable or unwilling to pay the higher wage, and will thus reduce employment (or go out of business altogether). Wayne's decision to close his Thai restaurant because he cannot afford to pay the higher minimum wage is an example of this type of unemployment, which is known as "disemployment" or "structural" unemployment.

What Would Be Associated with the Type of Unemployment Created