-Refer to Exhibit 4-7

question 29

Multiple Choice

-Refer to Exhibit 4-7.How many unskilled workers do firms want to employ at the minimum wage?

• A) N₂
• B) N₁
• C) N₃
• D) N₁ + N₃

---

Definitions:

Cost of Equity

The cost of equity is the return a company theoretically pays to its equity investors to compensate them for the risk of investing in the stock, often estimated using models like the Capital Asset Pricing Model (CAPM).

Financial Markets

Marketplaces where traders buy and sell assets such as stocks, bonds, currencies, and derivatives; they are crucial for economic growth, enabling the allocation of resources and the distribution of risk.

Cost of Equity

The cost of equity represents the return that investors expect from an investment in a company, essentially the amount of profit a company must generate to compensate its equity investors.

Growth Rate

The growth rate is a measure of the increase in a specific variable over time, commonly used to gauge the expansion of a company's revenue, profits, or population.