Asked by Jayleen Bocanegra on May 07, 2024
Verified
When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.
Equilibrium Wage
The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers.
Labor Supplied
The total number of hours that workers are willing and able to work at a given wage rate.
Minimum-Wage Law
Legislation that establishes the lowest hourly wage that employers can legally pay their workers.
- Scrutinize the influence of laws setting the lowest allowable wages on the dynamics of unemployment and labor market fluctuations.
Verified Answer
SA
Shayoom Al-bloushiiMay 13, 2024
Final Answer :
True
Explanation :
When the minimum wage is set above the equilibrium wage, it creates a surplus of labor because more people are willing to work at the higher wage than employers are willing to hire, leading to higher labor supply and lower labor demand than at equilibrium.
Learning Objectives
- Scrutinize the influence of laws setting the lowest allowable wages on the dynamics of unemployment and labor market fluctuations.