The Long-Run Market Solution to a Wage That Is So

question 26

Multiple Choice

The long-run market solution to a wage that is so low that workers cannot survive is:

• A) the reallocation of property rights, reducing the wage of some but increasing the wage for those earning a below-subsistence wage.
• B) the reallocation of scarce resources to those who need it the most.
• C) the starvation of some low-wage workers until the supply of labor shifts to the left and the wage for survivors increases to above subsistence.
• D) government intervention into the market to establish a minimum wage so that all workers earn at least a subsistence wage.

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Definitions:

Marginal Cost

The additional expense incurred from generating one more unit of a product or service.

Total Fixed Costs

The total of all expenses that stay unchanged no matter the amount of production or output.

Average Variable Costs

The variable cost (e.g., labor, raw materials) per unit of output, calculated by dividing total variable costs by the quantity of output produced.

Average Total Costs

The per unit cost of production, calculated by dividing the total cost of production by the number of units produced.