One Way to Remove the Excess Labor Supply Problem from a Minimum

question 36

Multiple Choice

One way to remove the excess labor supply problem from a minimum wage policy is to have the government hire all unemployed workers at the minimum wage. What is the key drawback of this version of a minimum wage policy?

• A) The deadweight loss may increase substantially.
• B) The cost to the government may be very large.
• C) Consumer surplus losses increase further.
• D) A and B are correct.
• E) B and C are correct.

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Definitions:

Three Decimal Places

Refers to numbers that are rounded or precise to the third digit after the decimal point.

\(100e^{-0.5x}\)

This represents an exponential expression used in various mathematical and scientific calculations.

Three Decimal Places

Refers to a numerical value rounded or fixed to have exactly three digits to the right of the decimal point.

\(70e^{-0.5x}\)

An exponential function representing growth or decay, where 70 is the initial quantity and \(-0.5x\) adjusts the rate of increase or decrease.