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Economics (AS & A Level) · Oct / Nov 2024 · Paper 32 · Question 12

9708Labour market forces and government intervention

In which situation is the introduction of a minimum wage most likely to raise employment opportunities as well as wages?

  1. AFirms face intense competition both at home and abroad.
  2. BLabour costs are a high proportion of the total cost of the firm.
  3. CThe minimum wage is not high enough to lower the profits of the firms.
  4. DThe minimum wage introduced in monopsony is less than the marginal revenue productivity (MRP) of the last worker employed.

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Correct answer: D. The minimum wage introduced in monopsony is less than the marginal revenue productivity (MRP) of the last worker employed.

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