ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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when Congress sets a new minimum wage
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when the demand for labor exceeds the supply
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when there is no excess in the demand for workers or in the supply of workers
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when the supply of labor exceeds the demand
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Detailed explanation-1: -Wages in a competitive market are determined by demand and supply. An increase in demand or a reduction in supply will increase the equilibrium wage. A reduction in demand or an increase in supply will reduce the equilibrium wage.
Detailed explanation-2: -The equilibrium market wage rate is at the intersection of the supply and demand for labour. Employees are hired up to the point where the extra cost of hiring an employee is equal to the extra sales revenue from selling their output.
Detailed explanation-3: -The labor market is in equilibrium when supply equals demand; E* workers are employed at a wage of w*. In equilibrium, all persons who are looking for work at the going wage can find a job. The triangle P gives the producer surplus; the triangle Q gives the worker surplus.
Detailed explanation-4: -A minimum wage set above the equilibrium wage rate creates a surplus of labor-the quantity of labor supplied exceeds the quantity of labor demanded. The minimum wage reduces employment so that it is less than the efficient amount.