Several Members of Parliament Have Been Greatly Concerned About the Fairness

question 151

Multiple Choice

Several Members of Parliament have been greatly concerned about the fairness of salaries in the marketplace. They are contemplating enacting a law that would fix the wage rate at WA. Their aides have returned with the results of an investigation into the matter, as portrayed in Graphs A and B.
FIGURE 11-1

-Refer to Figure 11-1. If the law were to impose a wage rate of WA on the K-12 teachers market, what would the expected result be?

• A) The demand for K-12 teachers would decrease.
• B) A shortage of K-12 teachers would soon result.
• C) A quantity of Q2 teachers would be supplied to the marketplace.
• D) There would be pressure from market forces for the supply to fall.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Annuity

A financial instrument that provides a consistent series of payments to a person, often utilized as a source of income for retired individuals.

Equivalent Cash Flows

Streams of equal value cash flows occurring at regular intervals.

Hurdle Rate

The minimum rate of return on a project or investment required by a manager or investor to proceed with the project.