A Minimum Wage of $7

question 136

Multiple Choice

A minimum wage of $7.25 per hour can cause structural unemployment if the equilibrium wage is:

• A) $7.25.
• B) $8.00.
• C) $6.85.
• D) $7.30.

Understand the relationship between value of marginal product of labor, wage, and firm's hiring decision.

Calculate and interpret the value of the marginal product of labor.

Understand the derivation of a firm’s demand for labor from its decision to supply goods.

Identify the factors of production and their impact on marginal product.

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Definitions:

Autokinetic Effect

Illusion, caused by very slight movements of the eye, that a stationary point of light in a dark room is moving

Group Norms

The beliefs or behaviors that a group of people accepts as normal.

Normative Conformity

The tendency to behave in ways that are in line with the group's norms or expectations in order to fit in or gain approval.

Devil's Advocate

Someone who adopts a position they do not necessarily agree with, for the sake of argument or to explore the thought process.