Minimum wage laws
A)creates a surplus of labor in markets where the equilibrium wage is above the minimum wage.
B)cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place.
C)are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Minimum wage laws are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets because employers in skilled-labor markets are often already paying higher wages to attract qualified workers. Additionally, unskilled workers may not have as many alternative job opportunities or bargaining power as skilled workers, making them more vulnerable to the effects of minimum wage laws. Choices A and B are incorrect because minimum wage laws do not necessarily create a surplus of labor or require the influence of labor unions for enactment.

Minimum Wage Laws