If a Minimum Wage Is Set Above the Equilibrium Wage

question 12

Multiple Choice

If a minimum wage is set above the equilibrium wage rate, employment

• A) will increase.
• B) will not change.
• C) will decrease.
• D) may increase, decrease or not change depending on how the supply of labor is affected by the minimum wage.

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Definitions:

Lubricants

Substances applied to reduce friction between surfaces in mutual contact, which ultimately reduces the heat generated when the surfaces move.

Variable Manufacturing Overhead

Costs that vary with the level of production output and include expenses such as indirect materials, supplies, and utilities used in manufacturing.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on efficient operations.

Variable Overhead

Costs that vary with the level of production or sales, such as utilities or hourly wages, that are not directly tied to a specific product.