What Minimum Amount of Tips Must an Employer Report as Allocated

question 6

Multiple Choice

What minimum amount of tips must an employer report as allocated to employees if gross food and beverage sales in the restaurant are $175,000?

• A)$10,500
• B)$17,500
• C)$21,000
• D)$14,000
• E)$26,250

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Definitions:

Deadweight Loss

A decrease in economic effectiveness occurring when a good or service doesn't reach its free market equilibrium.

Minimum Wage

The lowest legal hourly rate of pay that employers can compensate workers, established to protect employees from exploitation.

Equilibrium Price

The price point in the market at which the supply of goods matches the demand for those goods.

Price Floor

A government-set minimum price for goods or services, above the market equilibrium price, aimed at preventing prices from falling too low.