Chapter 8, Problem 7MCQ

To determine

The question requires us to determine the number of unemployed workers at a minimum wage of $10.

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 = 60 workers.

These 60 workers are considered unemployed as they are looking for a job but not getting one.

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.