mar350

With the wage rate set higher then what the market asks for those who would regularly get a job at the market rate are not able to find employment so part of the deadweight loss can be attributed to the time spent to find a job that isn’t available becasue the wage rate is artificially higher.
Essentially if there isn’t a floor on the wage all available positions are filled efficently. however the floor makes it inefficent and therefore less labour hours are availalbe. Inturn shifting the equilibrium leading to the deadweight loss and usually excess capacity, not over production.