-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.
A) $800
B) $900
C) $1,800
D) $400
E) $200

Question

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.
A) $800 
B) $900 
C) $1,800 
D) $400 
E) $200

Quizplus · Accepted Answer

The firms' surplus, also known as producer surplus, is the area above the supply curve but below the price level, up to the quantity traded. When a minimum wage is set above the equilibrium wage, it typically results in a surplus of labor (unemployment) and a reduction in the quantity of labor hired. The firms' surplus would be represented by the triangular area between the supply curve (wage rate) and the new minimum wage, up to the new, lower quantity of labor hired. Without the specific graph and assuming a standard supply and demand curve for labor, the exact calculation can't be provided, but given the options and typical outcomes of minimum wage implementations, the firms' surplus would decrease as they have to pay more than the equilibrium wage. Option D is chosen based on the assumption it represents a scenario described.

-The Above Figure Shows the Market for Biologists