The Minimum Wage Is Set Above the Equilibrium Wage Rate

question 171

Multiple Choice

The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

• A) Yes
• B) No
• C) Only if the supply of labor is perfectly inelastic
• D) Only if the supply of labor is perfectly elastic
• E) Only if employment exceeds the efficient amount

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Definitions:

Par Common Stock

The nominal or face value of a share of common stock, as stated in the corporate charter, which has minimal effect on its market value.

Market Value

The existing rate at which a service or asset is available for purchase or sale on the marketplace.

Paid-In Capital

Funds raised by a company from investors through the issuance of securities such as stocks, representing the capital contributed by shareholders in excess of the par value of the shares.

Stockholders' Equity

Stockholders' equity represents the residual interest in the assets of a corporation, after deducting liabilities.