QuestionJune 14, 2025

Which of the following is an unintended consequence of a binding minimum wage? Select an Answer A. A binding minimum wage encourages firms to look for ways to substitute capital for workers. B. A binding minimum wage can create unemployment. C. A binding minimum wage lowers the quantity of labor demanded. D. all of the above

Which of the following is an unintended consequence of a binding minimum wage? Select an Answer A. A binding minimum wage encourages firms to look for ways to substitute capital for workers. B. A binding minimum wage can create unemployment. C. A binding minimum wage lowers the quantity of labor demanded. D. all of the above
Which of the following is an unintended consequence of a binding minimum wage?
Select an Answer
A. A binding minimum wage encourages firms to look for ways to substitute capital for
workers.
B. A binding minimum wage can create unemployment.
C. A binding minimum wage lowers the quantity of labor demanded.
D. all of the above

Solution
4.7(316 votes)

Answer

D. all of the above Explanation 1. Analyze each option A binding minimum wage sets a floor on wages, which can lead to firms substituting capital for labor (Option A), creating unemployment due to excess supply of labor (Option B), and reducing the quantity of labor demanded as higher wages increase costs (Option C). 2. Determine if all options are consequences All listed options (A, B, C) are recognized unintended consequences of a binding minimum wage.

Explanation

1. Analyze each option<br /> A binding minimum wage sets a floor on wages, which can lead to firms substituting capital for labor (Option A), creating unemployment due to excess supply of labor (Option B), and reducing the quantity of labor demanded as higher wages increase costs (Option C).<br /><br />2. Determine if all options are consequences<br /> All listed options (A, B, C) are recognized unintended consequences of a binding minimum wage.
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