Binding minimum-wage laws
A)are costly for the government to impose.
B)force a market imbalance between the supply and demand for labor.
C)have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people.
D)do not affect segments of the population who are not poor.

Question

Quizplus · Accepted Answer

Binding minimum-wage laws force employers to pay a higher wage than what the market would naturally determine, causing a shortage of employment opportunities and an excess of labor supply. This leads to a market imbalance, where there are more workers willing to work at the minimum wage than there are jobs available, and some workers are discouraged from seeking employment altogether. Additionally, minimum-wage laws may have unintended consequences such as reducing hours, benefits or job opportunities for workers, making it an inefficient method of poverty reduction. Thus, B is the best choice because it accurately describes the market imbalance caused by binding minimum-wage laws.

Binding Minimum-Wage Laws