Rupert is a low-skilled dishwasher who may worry about a proposed minimum wage increase. A minimum wage functions as a price floor which tends to create surpluses rather than shortages, as it sets a legal minimum price businesses must pay for labor. Price ceilings, by contrast, tend to create shortages as they set maximum legal prices.

2. Rupert is a low-skilled worker who washes dishes in a local restaurant. A proposal to increase the minimum wage may worry him if he knows that price a) floors tend to create shortages b) ceiling tend to create shortages c) floors tend to create surpluses d) ceiling tend to create surpluses

3. Question is asking a proposal to increase the minimum wage would make price either floor or ceiling to create shortages or surpluses

4. price ceiling is a legal maximum on the price at which a good can be sold price floor is a legal minimum on the price at which a good can be sold.

5. a) floors tend to create shortages this is wrong because floors create surplus

6. b) ceiling tend to create shortages It is correct. But the question is asking a proposal to increase the minimum wage would make price either floor or ceiling to create shortages or surpluses price ceiling is a legal maximum price is it’s wrong

7. c) floors tend to create surpluses floors create surpluses. It’s correct. The question is asking a proposal to increase the minimum wage would make price either floor or ceiling to create shortages or surpluses price floor is a legal minimum price This is the right answer

8. d) ceiling tend to create surpluses ceiling create shortages. So it’s incorrect