When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a surplus of labor.

Question

Quizplus · Accepted Answer

When the minimum wage is set above the equilibrium wage (where supply and demand balance), it results in a surplus of labor because more people are willing to work at the higher wage than there are jobs available, leading to unemployment.

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