Figure 6-9 -Refer to Figure 6-9. in This Market, a Minimum Wage

question 131

Multiple Choice

Figure 6-9

-Refer to Figure 6-9. In this market, a minimum wage of $7 is

• A)binding and creates a labor shortage.
• B)binding and creates unemployment.
• C)nonbinding and creates a labor shortage.
• D)nonbinding and creates neither a labor shortage nor unemployment.

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Definitions:

MPC

Marginal Propensity to Consume refers to the fraction of any additional income that is used for consumption purposes.

Consumption

The act of households utilizing goods and services.

Disposable Income

The sum of funds that families can allocate to expenditure and savings once they've paid their income taxes.

MPC

The marginal propensity to consume, which represents the proportion of an increase in income that is spent on consumption rather than being saved.