(Last Word) Which of the Following Best Explains Why an Increase

question 2

Multiple Choice

(Last Word) Which of the following best explains why an increase in the minimum wage is more problematic for mom and pop restaurants than for big chain restaurants?

• A) Chain restaurants are exempt from minimum wage laws.
• B) Mom and pop restaurants have more difficulty attracting workers when wages rise.
• C) Mom and pop restaurants are more dependent on labor relative to chain restaurants.
• D) Chain restaurants have more monopoly pricing power and can more easily raise prices than mom and pop stores.

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Definitions:

Yield

The income returned on an investment, expressed as a percentage of the cost of the investment.

Treasury Bond

A long-term, fixed-interest government debt security with a maturity of more than 10 years issued by the U.S. Department of the Treasury.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, which includes all remaining coupon payments and the repayment of the principal.

Credit Risk

The risk of loss due to a borrower's failure to make payments on any type of debt.