Minimum wages create unemployment in markets where they create a
A)shortage of labor.Unemployment of this type is called frictional.
B)shortage of labor.Unemployment of this type is called structural.
C)surplus of labor.Unemployment of this type is called frictional.
D)surplus of labor.Unemployment of this type is called structural.

Question

Quizplus · Accepted Answer

Minimum wages can lead to a surplus of labor because they set the price of labor above the equilibrium, meaning more people are willing to work at that wage than there are jobs available. This type of unemployment is called structural because it is caused by a mismatch between the skills or location of workers and the requirements of the jobs.

Minimum Wages Create Unemployment in Markets Where They Create a