The Following Figures Show the Demand and Supply of Labor

question 41

Multiple Choice

The following figures show the demand and supply of labor in two different types of labor market. Figure 29.5 In the figures,
D: Demand curve for labor
S: Supply curve of labor
MRP: Marginal revenue product
MFC: Marginal factor cost
In Figure 29.5, if a minimum wage of $10 is set by the government, then in market B:

• A)wage increases but labor employment decreases.
• B)wage increases but labor employment remains constant.
• C)wage decreases from $12 to $10.
• D)both wage and employment increase.
• E)both wage and employment decrease.

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Definitions:

Statute of Frauds

A legal doctrine requiring certain contracts to be in writing and signed by the parties involved to be enforceable.

Lifetime Employment

A practice, often associated with Japanese companies, where employees are hired with an understanding or expectation of employment security until retirement.

Performance

The act of fulfilling the duties or requirements specified in a contract or agreement.

Incidental Beneficiary

A third party who might receive a benefit from a contract between two other parties, although the contract is not primarily intended for the benefit of the third party.