Why Don't Wages Fall So That Everyone with the Skills

question 97

Multiple Choice

Why don't wages fall so that everyone with the skills and desire gets a job?

• A) The government might prevent it, through minimum-wage legislation.
• B) Labor unions might prevent it, through bargaining backed by the threat to strike.
• C) Firms themselves might prevent it, by voluntarily choosing to pay higher wages than necessary.
• D) All of these are reasons why wages may not fall to equilibrium.