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:

Price Ceilings

A government-imposed limit on the price charged for a product to prevent prices from rising to a certain level above equilibrium.

Price Floors

Government or regulatory-set minimum prices for goods or services, aimed at preventing prices from falling too low.

Price

The cost involved in purchasing a specific good or service.

Shortage

A situation where the demand for a product exceeds its supply, often leading to higher prices.