​Figure 52

question 32

Multiple Choice

​Figure 5.2. The figure shows the supply and demand curves of a firm.
-Which of the following is true?​

• A)​If minimum wage is set below the equilibrium wage, it leads to a labor surplus.
• B)​If anything interferes with the voluntary exchanges that make up a market, equilibrium does not occur.
• C)​Minimum wage helps deal with the problem of unemployment in the market for unskilled labor.
• D)​Producers are willing to employ more labor at a minimum wage.
• E)​Minimum wage leads to a situation of labor deficit in a market.

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Definitions:

Disguised Unemployment

Situations where more people are employed in a task or job than is necessary for its completion, leading to inefficiency.

Capital Goods

Long-term assets such as buildings, machinery, and equipment purchased by businesses to produce goods and services.

Terms of Trade

The ratio of an index of a country's export prices to an index of its import prices, used to measure the relative trading advantage or disadvantage.

Consumption

The use of goods and services by households, constituting one of the primary components of GDP.