25. In order for real wages to grow A) productivity must grow B) productivity mu

Question

25. In order for real wages to grow A) productivity must grow B) productivity must fall. C) money wages must grow. D) money wages must fall. 26, A minimum wage law creates a price (or wage) and a labor- A) floor, shortage B) floor, surplus C) ceiling, shortage D) ceiling, surplus 27. Units of input The above graph is A) the demand for labor. B) the supply of labor C) the supply of capital. D) the demand for capital. 28· The amount a person earns over and above the amount she/he would be willing to work for is called A) marginal resource cost. B) economic rent. C) marginal revenue product. D) profit on human capital. Page 5

Explanation / Answer

(25) (C)

Real wage = Money wage / Price level

So, real wage grows (falls) when money wage grows (falls).

(26) (B)

A minimum wage is imposed above free market equilibrium wage rate, which is a price floor. At higher wage, quantity of labor demanded falls and quantity of labor supplied rises, causing a surplus.

(27) (B)

This is labor supply curve which bends backward after a threshold wage rate.

(28) (B)

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