question+50

Question 50 Make up test: Rupert is a low skilled worker who washes dishes in a local restaurant. A proposal to increase the minimum wage may worry him if he knows that price

A) floors tend to create shortages. B) ceilings tend to create shortages C) floors tend ti create surpluses (Correct) D) ceilings tend to create surplues

First eliminate B and D because we know that minimum wage deals with price floors. And also price ceilings wont have any effect it they are higher than equilibrium price. Look at page 122 in your text book. It says that minimum wage will force wage to be higher than equilibrium which will cause Labor surpluses. Labor surpluses equal to unemployment so correct answer is C media type="custom" key="3563370"