The Minimum Wage Is Set Above the Equilibrium Wage Rate

question 171

Multiple Choice

The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

• A) Yes
• B) No
• C) Only if the supply of labor is perfectly inelastic
• D) Only if the supply of labor is perfectly elastic
• E) Only if employment exceeds the efficient amount

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Definitions:

Market Basket

A representative collection of goods and services used to track price changes for consumer expenditure and calculate inflation rates.

Base Year

A reference year against which economic or financial data is compared and indexed.

Current Year

Refers to the ongoing calendar year in which a statement is made or an event occurs.

GDP Price Index

A measure that compares the current price level of goods and services included in GDP to the price level in a base year.