Suppose the Current Equilibrium Real Wage Is $15 an Hour

question 28

Multiple Choice

Suppose the current equilibrium real wage is $15 an hour.Which of the following is true?

• A) A real wage above $15 an hour would lead to an excess demand for labor
• B) A real wage above $15 an hour would lead to an excess supply of labor
• C) The real wage must fall to prevent unemployment
• D) The real wage must rise to prevent unemployment
• E) A real wage below $15 an hour would lead to an excess supply of labor

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Definitions:

Perfectly Competitive Market

An economic model where numerous small firms compete against each other with identical products, no barriers to entry or exit, and no single firm can influence market prices.

Demand

The level of demand for goods or services that individuals have the willingness and financial capacity to acquire at assorted prices throughout a defined duration.

Supply

The complete volume of a specific commodity or service ready for consumption by customers.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single seller can influence the market price of goods.