-The Above Figure Shows the Labor Market in an Undeveloped

question 137

Multiple Choice

-The above figure shows the labor market in an undeveloped nation. If the minimum wage is set at $5.00 per hour, what effect will it have on the market for low-skilled labor?

• A) The minimum wage will have no effect when set above the equilibrium wage rate.
• B) The minimum wage will create a surplus of low-skilled labor.
• C) The minimum wage will create a shortage of low-skilled labor.
• D) The minimum wage will attract more labor to the low-skilled labor market and cause the wage rate to fall.

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Definitions:

Conspicuous Consumption

A term coined by Thorstein Veblen, referring to the spending of money on luxury goods and services to publicly display economic power—the consumption for the sake of prestige or status rather than utility.

Reputability

Refers to the quality or state of being reputable, widely respected, and honored by others, often used in the context of individuals, organizations, or businesses.

Leisure

Time spent away from work and essential domestic activities, typically used for relaxation, recreation, or personal interests.

Economic Motives

The underlying reasons that guide individuals or entities to make decisions regarding the allocation of resources.