Several Members of Parliament have been greatly concerned about the fairness of salaries in the marketplace. They are contemplating enacting a law that would fix the wage rate at WA. Their aides have returned with the results of an investigation into the matter, as portrayed in Graphs A and B.
FIGURE 11-1

-Refer to Figure 11-1. If the law were to impose a wage rate of WA on the K-12 teachers market, what would the expected result be?

Question

Several Members of Parliament have been greatly concerned about the fairness of salaries in the marketplace. They are contemplating enacting a law that would fix the wage rate at WA. Their aides have returned with the results of an investigation into the matter, as portrayed in Graphs A and B.
FIGURE 11-1
 
-Refer to Figure 11-1. If the law were to impose a wage rate of WA on the K-12 teachers market, what would the expected result be?

Quizplus · Accepted Answer

If a minimum wage is imposed on the K-12 teachers market, it would create a surplus of teachers as more people would be willing to supply their labor at the higher wage rate. This is represented by the shift from the original supply curve (S1) to the new supply curve (S2) on Graph A. This surplus of teachers would create pressure from market forces for the supply to fall (D), as there are more teachers than there are positions available. Therefore, the correct answer is D. A, B, and C are incorrect because they do not accurately reflect the expected result of the imposition of a minimum wage on the K-12 teachers market.

Several Members of Parliament Have Been Greatly Concerned About the Fairness