Assume that a minimum wage law is enacted and imposed on an otherwise perfectly competitive labor market. We can expect all of the following except
A) the number of people seeking employment to increase.
B) some people to be laid off.
C) the number of laborers demanded to decrease.
D) a greater unemployment rate.
E) more people to gain employment.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, imposing a minimum wage above the equilibrium wage can lead to an excess supply of labor, as employers reduce the number of workers they hire due to higher costs. This can increase unemployment, making E incorrect because it suggests more people would gain employment, which contradicts the expected outcome of a minimum wage imposition in such a market scenario.

Assume That a Minimum Wage Law Is Enacted and Imposed