Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales Fiwrt (in units) for the next three mon
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Answer:
Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $12.50.
Wage Labor Demanded Labor Supplied
$12.50 375,000 625,000
This will result in a surplus of labor (625,000 higher than 375,000)
Which of the following statements are true?
- Binding minimum wages cause structural unemployment. As with all price floors, a deadweight loss results, because the quantity supplied is much greater than the quantity demanded. In this case, the price of labor is the wage, and the deadweight loss = structural unemployment
- In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium. Since a labor surplus exists, the price of labor should start to decrease in order to match the equilibrium price.
- If the minimum wage is set at $12.50, the market will not reach equilibrium. The quantity supplied of labor is much greater than the quantity demanded for labor resulting in a surplus.
Answer:
price variance $(22,800.00) UNFAVORABLE
Explanation:
std cost $6.00
actual cost $9.00
quantity 7,600
difference $(3.00)
price variance $(22,800.00)
We calculate the actual cost by dividing total cost by the lbs purchased:
68,400/7,600 = 9
Because the diference is negative, the variance is unfavorable.
Each pound cost more than it was planned.