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If a minimum wage is set above the equilibrium wage in the labor market, what is the most likely effect?

A There will be excess supply of labor, and unemployment will increase.

At a minimum wage above the equilibrium wage, there will be an excess supply of workers, since firms will not employ all the workers who want to work at the minimum wage. Firms will substitute other productive inputs for labor and use more than the economically efficient amount of capital. The result "is" increased unemployment because even though there are workers willing to work for less than the minimum wage, firms cannot legally hire them.

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