The General Equilibrium Analysis of a Minimum Wage Applied to Only

question 95

Multiple Choice

The general equilibrium analysis of a minimum wage applied to only some sectors of the economy suggests that

• A) workers in all sectors will face increased wages.
• B) some workers in the covered sectors will lose their jobs and remain unemployed.
• C) some workers originally employed in the covered sectors will move to the uncovered sectors, driving down wages in the uncovered sectors.
• D) all workers will be worse off.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses to convert raw materials into finished products.

Work in Process Inventory

Inventory that includes goods that are in the production process but have not yet been completed or transferred to finished goods.

Process Cost System

An accounting system used to accumulate costs in industries where a homogeneous product is produced on a continuous basis.

Work in Process

Inventory category for items that are currently being produced or in the process of being transformed into finished goods.