Suppose a Minimum Wage of $4 an Hour Is in Force

question 107

Multiple Choice

Suppose a minimum wage of $4 an hour is in force, resulting in unemployment of 10 million hours. Then the demand for labour increases such that supply and demand curves intersect at a wage rate of $5 per hour. What will happen to the equilibrium wage rate and employment?

• A)The wage rate is $5 an hour and there will be no unemployment.
• B)The wage rate is $5 an hour and there will be a surplus of labour.
• C)The wage rate is $4 an hour and there will be a surplus of labour.
• D)The wage rate is $4 an hour and there will be no unemployment.
• E)The wage rate is $4 an hour and there will be unemployment.

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Definitions:

Learned Helplessness

A condition in which an individual feels unable to change their situation after repeatedly facing uncontrollable events, leading to passive and resigned behavior.

Spontaneous Recovery

A conditioned response's revival, once thought to be extinguished, after a time without exposure to the associated stimulus.

Operant Conditioning

An instructional method in which the magnitude of an action is either encouraged or suppressed through positive or negative feedback.

Pay Schedules

The structure outlining how frequently and in what manner employees receive their salaries or wages.