The Imposition of a Minimum Wage on a Competitive Labor

question 26

Multiple Choice

The imposition of a minimum wage on a competitive labor market will likely

• A)create additional employment opportunities because some low-skilled workers will now see their wage increase.
• B)lower the wages of workers earning more than the minimum wage.
• C)create unemployment as some people enter the labor market while some firms reduce the quantity of labor they are willing to employ due to the increased wage.
• D)increase unemployment of high-skilled workers as firms substitute high-skilled labor for low-skilled labor.
• E)lower the unemployment rate of low-income families.

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Definitions:

Diversification

In finance, selecting a portfolio of different (diverse) investments to limit the overall risk borne by the investor.

Economies of Scale

Cost advantages that a business can achieve due to expansion and increased production volume, leading to lower per-unit costs.

Unfriendly Merger

A takeover or merger which is not supported or welcomed by the target company's management and board of directors.

Preemptive Merger

A strategic merger aimed at preventing potential competition by acquiring or merging with a competitor before they become a larger threat.