If the Minimum Wage Law Sets a Price Floor Above

question 96

Multiple Choice

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

• A) minimum wage will create a surplus of unskilled labor.
• B) minimum wage will create a shortage of unskilled labor.
• C) minimum wage will not impact the unskilled labor market.
• D) unskilled labor market will change,but we cannot be certain how.

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Definitions:

Nominal Account

An account related to income, expenses, losses, or gains—these accounts are closed out to the capital account at the end of an accounting period.

Income Summary

An account to which all income statement account balances are transferred at the end of an accounting period to show the period's profit or loss.

Debit Balance

A situation in accounting where the sum of debits in an account exceeds the sum of credits, often indicating the extent of assets or expenses.

Closing Entries

To transition balances from temporary to permanent accounts, journal entries are executed at the end of the accounting period.