There Are Two Separate Labor Markets in Toontown,illustrated by the Graphs

question 116

Multiple Choice

There are two separate labor markets in Toontown,illustrated by the graphs below.Both labor markets currently pay $6.00 per hour,and both require the same skills and qualifications.The Toontown City Council is considering enacting a $7.50 living wage ordinance,which would require all Toontown employers to pay wages of at least $7.50 per hour.
If the living wage is enacted,total economic surplus will ___ in Market A and will ___ in Market B.

• A) increase;remain the same
• B) remain the same;decrease
• C) increase;increase
• D) decrease;decrease

---

Definitions:

Budgeted Plantwide Overhead

An estimate of the total overhead costs to be allocated across the whole plant or company, used for budgeting and costing purposes.

First Stage Cost Objects

In activity-based costing, initial categories where costs are collected before being assigned to final cost objects based on their use of activities.

Cost Objects

Items or activities for which costs are measured and assigned, such as products, services, projects, or departments.