Which of the following is an effect of a minimum wage law that establishes a wage floor above the current market clearing wage?
A) surplus labor, or unemployment
B) a decrease in the market clearing wage
C) a decrease in the quantity of labor supplied
D) an increase in the quantity of labor supplied

Question

Quizplus · Accepted Answer

A minimum wage law that establishes a wage floor above the current market clearing wage creates surplus labor, or unemployment. This is because the number of workers seeking jobs at the higher wage rate will exceed the number of available jobs, resulting in a surplus of labor. This surplus will lead to unemployment as some workers will not be able to find jobs at the mandated minimum wage.

Which of the Following Is an Effect of a Minimum