Which of the Following Occurs If a Firm Pays Workers

question 10

Multiple Choice

Which of the following occurs if a firm pays workers more than the market wage?

• A) Its application rate will be higher than usual.
• B) Its quit rate will be lower than usual.
• C) It will have a surplus of labor.
• D) All of above occur.

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Definitions:

Proportional Rate Structure

A tax system where the tax rate remains constant regardless of the amount of income, as opposed to progressive or regressive tax structures.

Progressive Rate Structure

This is a tax system in which the tax rate increases as the taxable base amount increases, typically applied to incomes to ensure higher earners pay a greater percentage of their income.

Regressive Rate Structure

A tax system where the tax rate decreases as the taxable amount increases, placing a higher burden on lower earners relative to higher earners.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed, a tool used to gauge the impact of additional income or deductions on income tax.