Session 4: Economics: Microeconomic Analysis
Reading 15: Markets in Action
LOS b: Describe labor market equilibrium and explain the effects and inefficiencies of a minimum wage above the equilibrium wage.
Which of the following statements about price floors and the labor market is least accurate?
|
A) |
In the long run, effective price floors lead to inefficiencies in production. | |
|
B) |
Setting a minimum wage above the equilibrium wage rate will lead to an excess supply of labor. | |
|
C) |
If a price floor is set below the equilibrium price, the quantity demanded will exceed the quantity supplied. | |
If a price floor is set below the equilibrium price, it will have no effect on the quantity demanded or supplied. However, a price floor (minimum wage in the labor market) above the equilibrium price (wage rate in the labor market) will cause a surplus at the floor price. Inefficiencies result from a price floor because producers will divert resources to supply a larger quantity of the good, but consumers will demand a smaller quantity at the floor price. | 
发表于 2011-3-6 15:42
|