Exhibit 13-5 -Refer to Exhibit 13-5. If This Figure Represents a Low-Skilled

question 152

Multiple Choice

Exhibit 13-5
-Refer to Exhibit 13-5. If this figure represents a low-skilled labor market, a minimum wage would be illustrated by

• A)None of the wages illustrates a minimum wage.
• B)W₃.
• C)W₂.
• D)W₁.
• E)the origin.

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Definitions:

General Equilibrium Analysis

A method in economics that attempts to understand how supply and demand interact across multiple markets simultaneously, and how they reach a state of balance.

Feasible Allocation

In economics, it refers to the distribution of resources or goods in such a manner that it is possible given the available supply.

Second Welfare Theorem

An economic principle stating that under certain conditions, any efficient allocation of resources can be attained through a competitive equilibrium, assuming perfect markets and price flexibility.

Pareto Optimal

A distribution state of resources where trying to improve the status of one individual inevitably leads to the decline of another's.