An Increase in the Minimum Wage

question 25

Multiple Choice

An increase in the minimum wage

• A)increases both the quantity demanded and the quantity supplied of labor.
• B)decreases both the quantity demanded and the quantity supplied of labor.
• C)increases the quantity of labor demanded but decreases the quantity of labor supplied.
• D)decreases the quantity of labor demanded but increases the quantity of labor supplied.

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Definitions:

Productive Efficiency

A situation in which an economy or production process cannot produce more of one good without sacrificing the production of another good and without improving the production technology.

Allocative Efficiency

A state of the economy in which production is in accordance with consumer preferences; every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.

Price Discrimination

A pricing strategy where a company sells the same product or service at different prices to different customers, often based on their willingness to pay.

Pure Monopoly

A market structure where a single firm controls the entire supply of a product or service, with no close substitutes available, allowing it to influence price significantly.