Chapter 8, Problem 6MCQ

To determine

The question requires us to determine the number of workers who benefit from the higher wage.

Explanation of Solution

In the given figure, when the government sets a minimum wage law at $10, the quantity supplied in the labor market increases from 80 workers to 110 workers. The number of workers demanded falls from 80 workers to 50 workers.

Quantity supplied = 110 workers

Quantity demanded = 50 workers.

Since the quantity supplied is less than the quantity demanded, there is a surplus of workers in the labor market.

Surplus of workers = Quantity supplied − Quantity demanded

Surplus of workers = 60 workers

Option “c” is correct.

Economics Concept Introduction

The minimum wage is a price control method used by the government to protect labor from exploitation and to bring the market into a required shape. In this method, the government sets a wage that is above the equilibrium wage in the labor market. The government usually sets price-controlling methods to safeguard the marginal group or a specific group, but these methods result in various types of inefficiencies in the market.