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Question

Minimum wages create unemployment in markets where they create a a. shortage of labor. Unemployment of this type is called frictional. b. shortage of labor. Unemployment of this type is called structural. c. surplus of labor. Unemployment of this type is called frictional. d. surplus of labor. Unemployment of this type is called structural.

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Chad

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#### Solution By Steps

***Step 1: Identify the Impact of Minimum Wages***

Minimum wages can lead to either a shortage or a surplus of labor in a market.

***Step 2: Define Frictional Unemployment***

Frictional unemployment occurs when individuals are temporarily between jobs or are entering the workforce.

***Step 3: Define Structural Unemployment***

Structural unemployment arises from a mismatch between the skills of the labor force and the requirements of the job market.

***Step 4: Connect Minimum Wages to Unemployment Types***

Minimum wages creating a surplus of labor leads to structural unemployment, while a shortage of labor results in frictional unemployment.

#### Final Answer

Minimum wages creating a surplus of labor leads to structural unemployment. Therefore, the correct option is d. surplus of labor. Unemployment of this type is called structural.

#### Key Concept

Minimum Wage Impact

#### Key Concept Explanation

Minimum wages can either create a surplus or a shortage of labor, affecting the type of unemployment in the market. Surplus of labor due to minimum wages typically leads to structural unemployment.