The Market Wage Could Be Higher Than the Equilibrium Wage

question 18

Multiple Choice

The market wage could be higher than the equilibrium wage if a worker

• A)is a superstar.
• B)belongs to a labor union.
• C)has more human capital.
• D)All of the above are correct.

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Definitions:

Capital Asset

A long-term asset that is significant in value and is used for operations, not easily converted to cash, and often depreciates over time.

Tax Rate

The tax rate is the percentage at which an individual or corporation is taxed, which can vary depending on income level, type of income, or jurisdiction.

Present Value

The contemporary valuation of a future sum of money or sequence of cash inflows, considering a certain rate of return.

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile.