PRC-3 · Chapter 10 · Question 27 of 70
The government enforces a strict minimum wage law (a price floor) that is significantly higher than the current free-market equilibrium wage. What is the unintended economic consequence in the labor market?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A surplus of labor (unemployment)
Explanation
A price floor set above equilibrium means more people want to work than companies are willing to hire at that high wage, creating a surplus of labor (unemployment).
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