If the minimum wage is set above the market wage
A)the quantity of labor supplied will be below the quantity of labor demanded.
B)unemployment will rise.
C)highly-skilled workers will have a harder time finding jobs.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

If the minimum wage is set above the market wage, it will create a surplus of labor, i.e., more workers will be willing to work at the higher minimum wage than the number of jobs available. This will lead to unemployment as employers will not be able to hire all the workers who are willing to work at that wage. Hence, option B is correct. Option A is also partially correct, as the surplus of labor will result in a quantity of labor supplied that is less than the quantity of labor demanded. Option C, on the other hand, is not necessarily true as highly-skilled workers may not be affected by the minimum wage as their wages are already higher than the minimum wage.

If the Minimum Wage Is Set Above the Market Wage