If the Legal Minimum Wage Rate Is Set at $1/hour

question 112

Multiple Choice

If the legal minimum wage rate is set at $1/hour instead of at the equilibrium rate,

• A)employment for inexperienced and marginal workers will tend to fall.
• B)employment of inexperienced and marginal workers will tend to rise.
• C)employment of inexperienced and marginal workers will not be affected.
• D)there is no way to determine how the employment of inexperienced and marginal workers would be affected.

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Definitions:

Marginal Utility

The additional satisfaction or benefit received by consuming one more unit of a good or service.

Budget Line

A representation of all possible combinations of two goods that an individual can afford given their income and the prices of the goods.

Income-Consumption Curve

A graphical representation showing how a consumer's optimal bundle of goods varies with changes in income.

Price Elasticity

A measure reflecting the impact of price variations on the demand for a particular product.