If the Labor Supply and Demand Curves Cross at a Wage

question 5

Multiple Choice

If the labor supply and demand curves cross at a wage of $20,

• A) a wage rate of $10 per hour would lead to an excess demand for labor
• B) a wage rate of $10 per hour would lead to an excess supply of labor
• C) that wage causes a high rate of cyclical unemployment
• D) employees are overpaid
• E) a wage rate of $10 per hour would mean there is a significant amount of structural unemployment

---

Definitions:

Contribution Format

A method of income statement presentation that separates variable costs from fixed costs, highlighting the contribution margin.

Sales Mix

The proportion of different products or services that comprise the total sales of a company, affecting overall profitability.

Contribution Margin Ratio

The percentage of revenue that exceeds variable costs, indicating the proportion of sales that contributes to fixed costs and profits.

Break-Even Point

The production level or sales volume at which total revenues equal total costs, resulting in zero profit.