Consider the Accompanying Figure Representing the Labor Market Below

question 95

Multiple Choice

Consider the accompanying figure representing the labor market below. Suppose the government passes a minimum wage requiring employers to pay at least $8.00 per hour. Prior to the imposition of the minimum wage, worker surplus is ________ per day, and after the imposition of the minimum wage, worker surplus is ________ per day.

• A)$9,000; $1,000
• B)$9,000; $5,000
• C)$18,000; $2,000
• D)$18,000; $14,000

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Definitions:

Variable Cost

A cost that varies with the level of output or activity, in contrast to fixed costs, which remain constant regardless of activity.

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent, salaries, and insurance.

Break-Even Point

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Monthly Profit

The total revenue of a business minus the total expenses for the month, indicating the financial gain.