A Minimum Wage Set Above the Equilibrium Wage Will ________

question 230

Multiple Choice

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease
• E) not change; not change

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Definitions:

Fixed Expenses

Costs that do not change in total regardless of the level of production or sales activity, such as rent and salaries.

Net Income

The total profit or loss of a company after all expenses, including taxes and operating costs, have been subtracted from revenues.

Break-Even Point

The point at which total cost and total revenue are equal, meaning there is no profit or loss.

Direct Materials

The raw materials that are directly traceable to the manufacturing of a product and are integral to its production.