When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.

Question

Quizplus · Accepted Answer

When the minimum wage is set above the equilibrium wage, it creates a surplus of labor because more people are willing to work at the higher wage than employers are willing to hire, leading to higher labor supply and lower labor demand than at equilibrium.

When a Minimum-Wage Law Forces the Wage to Remain Above