A Binding Minimum Wage Established by the Government

question 34

Multiple Choice

A binding minimum wage established by the government

• A)is essentially a price ceiling that creates a shortage of workers.
• B)will be effective only if the minimum wage is set below the free-market equilibrium wage.
• C)will have no effect on the quantity of labour employed.
• D)will affect adversely only those workers whose value of productivity is greater than this minimum wage.
• E)is a price floor that will create a surplus of workers if the labour market is competitive.

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Definitions:

Perfection Standards

Standards that represent ideal performance levels or the absence of defects in products or processes.

Quantity Standard

A benchmark or norm for the amount of materials, labor, and overhead required to produce a unit of output in a given period.

Performance Level

A measurement of the efficiency and effectiveness of a process or activity.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, often used to assess workforce efficiency or cost control.