Respuesta :
That statement is false
Binding minimum wage refers to the minimum wage that exceed the wage equilibrium in the market, not the wage that prevent the labor market from reaching equilibrium.
When the minimum wage is set higher than the equilibrium, most people in the market would be bidden to increase the average wage given to the employees and move the wage equilibrium up.
The statement is False.
Further Explanation:
Minimum wage: The government implements a price floor to ensure that the employers should pay their employees a minimum wage rate. If the wages are paid at a rate that is lower than the rate fixed by the government, it is considered as illegal. A minimum wage is binding when it is set more than the equilibrium wage. When a minimum wage is binding, wage-fixing is blocked. The market is also prevented from apportioning labor resources. If it is below the equilibrium wage, then the employees will be underpaid. When the minimum wage is more than the equilibrium wage then some companies are not able to hire the employees, and this will lead to an increase in unemployment. It will lead to a new minimum wage rate.
Therefore, a minimum wage that is binding minimum wage is set above the equilibrium wage. Thus minimum wage below $10 is not a minimum wage that is bidding in the market.
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Answer details:
Grade: High School
Subject: Economics
Chapter: Demand and Supply
Keywords: a minimum wage below $10 per hour is a binding minimum wage in this market, true or false, prevents the labor, market from reaching, equilibrium, a binding minimum wage, labor resources.
