The Intention of a Minimum Wage Is To

question 53

Multiple Choice

The intention of a minimum wage is to:

• A)keep the wage rate at par with the equilibrium wage.
• B)keep the wage rate below the equilibrium wage.
• C)raise the wage rate above the equilibrium wage.
• D)keep the wage rate at par with the wage of the skilled workers.
• E)make the wages of the skilled and unskilled workers equal.

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Definitions:

Diminishing

A principle often referring to diminishing returns, where additional inputs result in progressively smaller increases in output.

Marginal Product

The additional output resulting from the use of one more unit of a production input, holding all other inputs constant.

Production Function

An economic model that describes the relationship between the inputs a firm uses and the output it creates.

Competitive

Relates to a market situation where multiple sellers are trying to appeal to the same customers, often leading to innovation and better prices.