What factors can push the real wage rate above its equilibrium level? Briefly explain each factor
What will be an ideal response?
The three factors that can push the real wage rate above the equilibrium wage rate are efficiency wages, the minimum wage, and union wages. An efficiency wage is a wage rate that is set by a firm above the equilibrium wage rate. The idea is that the firm's workers will work hard in order to keep their jobs because they know that if they are fired the (equilibrium) wage they are likely to get at a new job will be less than the efficiency wage. The minimum wage is a government regulation that sets the lowest legal wage. If the minimum wage is set above the equilibrium wage rate, the equilibrium wage rate becomes illegal. Finally, a union wage is a wage rate that results from bargaining between a firm and a labor union. Typically the labor union can negotiate a wage rate that exceeds the equilibrium level in a competitive market.
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If the marginal benefit of additional spending on a public health measure is greater than its marginal cost, then total economic surplus
A. will increase if the government increases spending on the health measure. B. is equal to zero. C. will decrease if the government increases spending on the health measure. D. has been maximized.
Use the following table to answer the next question.Total ProductTotal Fixed CostTotal Variable Cost0$150$0115050215075315010541501455150200615027071503608150475915062010150800Based on the cost data given, which of the following price-quantity tables correctly represents the firm's short-run supply schedule?(1)(2)(3)(4)PQsPQsPQsPQs$201$200$200$203302300300304453454450455604605600606755756755757956957956958120712081207120915081509150815010
A. Table (1) B. Table (2) C. Table (3) D. Table (4)
If e = 0.125, c = 0.08, and D = 720, the total demand for high-powered money is
A) 32.4. B) 3512.20. C) 572.4. D) 147.6.
Which of the following is correct concerning recessions?
a. They come at fairly regular and predictable intervals. b. They are associated with comparatively large increases in investment spending. c. They are any period when real GDP growth is less than average. d. They tend to be associated with rising unemployment rates.