If the Wage Rate Is Artificially Set Higher Than the Equilibrium

question 130

Multiple Choice

If the wage rate is artificially set higher than the equilibrium wage rate, this will lead to:

• A)unemployment
• B)excess demand for labour
• C)the value of the marginal product of labour no longer equaling the wage rate
• D)firms failing to maximise profits

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Definitions:

Total Revenue

The gross income generated from the core business activities of a company, including the sale of products and services.

Liability

Debts or monetary commitments that a firm has to settle with others, requiring the provision of economic benefits such as cash, products, or services over a period.

Expense

Costs incurred by a business in the process of earning revenue, typically categorized as fixed, variable, or periodic.

Accrual

Accrual is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.