Suppose That This Graph Describes the Current Labor Market for High

question 98

Multiple Choice

Suppose that this graph describes the current labor market for high school teachers: If the wage is w*, then:

• A)there will be a shortage of certified teachers.
• B)there will be a surplus of certified teachers.
• C)there will be neither a shortage nor a surplus of certified teachers.
• D)teachers will be underpaid.

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Definitions:

Wage Rate

The wage rate is the amount of compensation a worker receives per unit of time worked, often expressed per hour or per year.

Marginal Revenue Product

The extra revenue generated by employing one additional unit of a resource, such as labor or capital.

Diminishing Marginal Returns

A principle stating that after an optimal point, further increases in one input while holding others constant will result in smaller and smaller gains in output.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a variable input.