A Surplus of Labor Is Eliminated by ________ in the Real

question 126

Multiple Choice

A surplus of labor is eliminated by ________ in the real wage rate and a shortage of labor is eliminated by ________ in the real wage rate.

• A)an increase; an increase
• B)an increase; a decrease
• C)a decrease; an increase
• D)a decrease; a decrease
• E)None of the above answers are correct because shortages and surpluses are eliminated by changes in the demand for labor and the supply of labor, not the wage rate.

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Definitions:

Marginal Benefit

The extra pleasure or benefit gained from consuming an additional unit of a product or service.

Marginal Cost

The added financial burden of producing another unit of a product or service.

Efficient Price

The price at which the supply of a good matches its demand, leading to an optimal distribution of resources in a market.

Consumer Surplus

Consumer surplus represents the discrepancy between what consumers are prepared and capable of spending for a product or service and the actual amount they end up paying.