-The Table Above Gives the Labor Market for a Small

question 119

Multiple Choice

$$\begin{array} { c c c } \begin{array} { c } \text { Real wage rate Quantity of labor demanded } \\\text { (2005 dollars } \\\text { (millions of hours } \\\text { per hour) }\end{array} & \begin{array} { c } \text { Quantity of labor supplied } \\\text { (millions of hours } \\\text { per month) }\end{array} \\\hline 7.15 & 90 & 25 \\7.65 & 70 & 32 \\8.00 & 60 & 60 \\8.50 & 45 & 70 \\9.00 & 20 & 85 \\\hline\end{array}$$
-The table above gives the labor market for a small foreign economy. A(n) ________ would create ________.

• A) minimum wage of $5.00; an increase in job rationing.
• B) union-negotiated wage of $7.50; unemployment and job rationing.
• C) efficiency wage of $8.00; unemployment and job rationing.
• D) efficiency wage of $9.00; an increase in job rationing.
• E) minimum wage of $9.00; a decrease job search.

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Definitions:

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use does not reduce its availability to others.

Private Good

A product or service that is consumable and excludable, meaning its use can be restricted to paying customers.

Pareto Optimal

A situation in the economy where optimizing the allocation of resources means that improving one person's situation leads to a decline in another's.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning that individuals cannot be effectively excluded from use, and use by one individual does not reduce availability to others.