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5 July, 20:10

If the wage is kept above the equilibrium level because of minimum-wage laws, then the result is unemployment; if the wage is kept above the equilibrium level for some other reason, the result need not be unemployment. T/F

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  1. 5 July, 21:39
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    False

    Explanation:

    Labour Markets are at equilibrium where : Market Demand for labour (by firms) = Market Supply of Labour (by labourers), & the respective curves intersect.

    Labour Demand curve is downward sloping, as firms' demand is inversely related to price i. e wages. Labour supply curve is upward sloping, as labourers' supply is directly to price (wages).

    If wage is higher than equilibrium wage : labour supply being directly related to wage, will be more. And, labour demand being inversely related to wage, will be less. It would lead to excess supply of labour in comparison to its demand. This would imply many people are able & willing to work at the prevailing wage rate, not getting jobs - i. e unemployment.

    Wage higher than equilibrium wage rate will have Unemployment impact, irrespective of the cause (minimum-wage laws or other) of wage rise.
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