Suppose That the Labor Market for Life Guards Is Initially

question 510

Multiple Choice

Suppose that the labor market for life guards is initially in equilibrium. Then a new television series debuts which glamorizes the social opportunities for life guards. What happens to the equilibrium wage and quantity of life guards?

• A)Both the equilibrium wage and quantity increase.
• B)Both the equilibrium wage and quantity decrease.
• C)The equilibrium wage increases, and the equilibrium quantity decreases.
• D)The equilibrium wage decreases, and the equilibrium quantity increases.

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Definitions:

Incremental Profit

The additional profit derived from making changes to the business operations, such as increasing production or sales.

Cash Payback Period

The duration of time it takes for an investment to generate enough cash flow to recover its initial cost.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenues, indicating profitability.

Straight-Line Rate

A method of calculating depreciation by dividing the difference between an asset's cost and its salvage value by the number of years it is expected to be used.