Suppose the Current Equilibrium Wage Rate for Lifeguards in Houston

question 209

Multiple Choice

Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour.A minimum wage law that creates a price floor of $8.50 an hour leads to

• A) a surplus of lifeguards in Houston.
• B) a shortage of lifeguards in Houston.
• C) no changes in the lifeguard market.
• D) a change in the quantity of lifeguards supplied but no change in the quantity of lifeguards demanded.
• E) an increase in the number of lifeguards employed.

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Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment or to pay off debt.

Net Income

The total profit of a company after subtracting all expenses, taxes, and costs from its total revenue.

Inventory Method

The approach or system used by a company to track and manage inventory, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).