Minimum Wage Legislation

question 19

Multiple Choice

Minimum wage legislation:

• A) sets a price ceiling above the market-clearing price.
• B) has no impact if the minimum wage is above the market-clearing price.
• C) has the same impact in all labor markets.
• D) creates unemployment when the minimum wage is above the equilibrium wage.
• E) is opposed by organized labor.

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Definitions:

Net Income

The final earnings of a company after total revenue has had all taxes and expenses removed.

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year or within the entity's operating cycle.

Current Ratio

A liquidity ratio that measures a company’s ability to pay short-term obligations with its current assets.