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- Subject
- Labour Marketeconomics-mcqs › labour-market
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
What happens if the wage rate is set above the competitive equilibrium wage for any reason?
Multiple choice question for Labour Market. Select an option, then review the explanation below.
Explanation
When wages are maintained above the equilibrium level, more workers are willing to work than there are jobs available, causing unemployment. Contrary to this, if wages were below equilibrium, shortages or strikes might occur. Therefore, an above-equilibrium wage leads to excess labour supply and unemployment.
More Labour Market MCQs
Practice related questions from the same subject.
- 1.How do unions typically contribute to widening the wage gap between union members and non-union workers?
- 2.Under which circumstance can unions enhance efficiency?
- 3.Which of the following reasons explains why companies might choose to pay efficiency wages?
- 4.Which of the following government actions is least likely to decrease the unemployment rate?
- 5.What is the typical effect of a minimum wage law on employment levels?