Minimum-wage laws
A)create frictional unemployment,while firms paying wages above equilibrium to reduce worker turnover creates structural unemployment.
B)create structural unemployment,while firms paying wages above equilibrium to reduce worker turnover creates frictional unemployment.
C)and firms paying wages above equilibrium to reduce worker turnover both create structural unemployment.
D)and firms paying wages above equilibrium to reduce worker turnover both create frictional unemployment.

Question

Quizplus · Accepted Answer

Minimum-wage laws and firms paying wages above equilibrium both create structural unemployment because they set wages above the market-clearing level, leading to a surplus of labor (unemployment) that is not resolved by the normal job search process.

Minimum-Wage Laws