The likely consequence of a binding minimum wage in a competitive labour market is
A) excess demand for workers.
B) unemployment.
C) a lower wage for all individuals.
D) a labour shortage.
E) a higher wage for all individuals.

Question

Quizplus · Accepted Answer

A binding minimum wage in a competitive labour market would result in an increase in the wage rate, which would increase the supply of labour from workers and reduce the demand from employers. This would create a surplus of labour, leading to unemployment.

The Likely Consequence of a Binding Minimum Wage in a Competitive