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:

Independence

The state or quality of being self-governing and free from outside control or support in making decisions.

Arbitrage

The search for deals on production factors across geographic boundaries.

Semiconductor Manufacturer

A company involved in the production of semiconductors, crucial components used in electronic devices to control electrical current.

Germanium

A chemical element with the symbol Ge and atomic number 32, used as a semiconductor in electronics.