The figure above shows the labor market in a small town. If the government imposes ________ that firms must at least pay, the effect will be ________ because ________
A) a minimum wage of $10; an increase in unemployment; a surplus of labor is created
B) a minimum wage of $10; no change in unemployment; it will not affect how firms demand labor
C) a minimum wage of $10; a decrease in unemployment; a shortage of labor is created
D) an efficiency wage of $10; an increase in unemployment; a shortage of labor is created
E) an efficiency wage of $10; a decrease in unemployment; a surplus of labor is created
A
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Use the following graph for a perfectly competitive firm generating a loss in the short run to answer the next question.
Which of the following market changes would allow the firm to earn an economic profit?
A. an increase in the number of firms entering the industry B. a decrease in market demand C. a decrease in the price of the industry's product D. an increase in market demand
If the demand for labor ________, real wages fall and the amount of labor employed ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
If the Fed fears a recession, it
A) decreases aggregate supply. B) buys government securities. C) sells government securities. D) decreases the quantity of money. E) decreases aggregate demand.
The above figure shows the supply and demand curves for high-skilled and low-skilled labor. High-skilled workers earn a wage rate of
A) $15 per hour. B) $12 per hour. C) $9 per hour. D) $6 per hour.