Imposing a minimum wage may cause the quantity of labor services demanded to fall short of the quantity that laborers are willing to supply at the minimum wage.

Question

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When a minimum wage is imposed, employers may find it too expensive to hire as many workers as they require. This means they will demand less labor, causing a surplus of workers willing to work at the minimum wage but not enough job openings available to accommodate them. As a result, the quantity of labor services demanded may fall short of the quantity that laborers are willing to supply at the minimum wage.

Imposing a Minimum Wage May Cause the Quantity of Labor