If the market wage for fast-food restaurants is $4 and the government enforces a minimum wage of $7, the unemployment rate will
A. Not be affected by the minimum wage.
B. Increase as quantity of labor supplied increases and quantity of labor demanded decreases.
C. Increase as quantity of labor supplied increases and quantity of labor demanded increases.
D. Increase as quantity of labor supplied decreases and quantity of labor demanded increases.
Answer: B
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Which of the following is a necessary condition for government subsidies to influence a firm to choose an output level as if it were a Stackelberg leader?
A) The subsidy must be announced before the firms choose output levels. B) The subsidy must be equal to the firm's marginal cost. C) The subsidy must be equal to the firm's rival's marginal cost. D) The firm does not have any fixed costs.
Suppose demand for a good is QD = 100 - P and supply is QS = -20 + P. What is the consumer surplus?
a. 200 b. 400 c. 600 d. 800
One reason a computer manufacturer may make its own microchips rather than buy them is that
a. it can maintain control over the quality during production b. the total cost of components is the same as the price of chips purchased from a chip manufacturer c. firms do not make high-quality microchips d. managers at the computer firm place a high value on their time e. firms do not produce goods for the market that can be made in-house
Our ability to manage Social Security as a "pay-as-you-go" program (in which taxes collected from those currently working are used to make benefits payments to those currently retired) is impaired when the number of retirees per worker increases. The current concern about the stability of Social Security is based primarily on projections that there will many more retirees per worker as the baby boomers continue to retire. Then, if we want to maintain a pay-as-you-go system, we can:
A. raise payroll taxes to ease the burden on those currently working. B. lower payroll taxes to compensate for the increase in the number of retirees. C. lower payroll taxes to ease the burden on those currently working. D. raise payroll taxes to compensate for the increase in the number of retirees.