The Federal Minimum Wage Is

question 2

Multiple Choice

The federal minimum wage is:

• A)not likely an efficiency wage because it does not attract high quality workers.
• B)likely an efficiency wage because it prevents firms from hiring unskilled workers and lowers it total cost of production.
• C)likely an efficiency wage because it lowers the costs of searching for new workers.
• D)not likely an efficiency wage because firms would attempt to earn higher profits without any government intervention.

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Definitions:

Trading Off

The act of giving up one benefit in order to gain another, often seen as a compromise.

Rationale

The underlying reasons or logical basis for a belief, action, or method.

Premature Dominance

The early establishment of control or influence in a situation before all factors have been appropriately considered.