If, for any reason, the wage is held above the competitive equilibrium wage,

Question

a. unions will likely strike and the wage will fall to equilibrium.
b. the quantity of labor demanded will exceed the quantity of labor supplied and there will be a labor shortage.
c. the quality of workers in the applicant pool will tend to fall.
d. the quantity of labor supplied will exceed the quantity of labor demanded and there will be unemployment.

Answer 1

If the wage is held above the competitive equilibrium wage, the correct answer is:

d. the quantity of labor supplied will exceed the quantity of labor demanded and there will be unemployment.

When the wage rate is set above the equilibrium level, more workers are willing to work at that higher wage (increased supply), but employers are not willing to hire as many workers at that wage (decreased demand), leading to a surplus of labor, or unemployment.