Question

You’re working on a non-guaranteed deal, and your colleague recommends bidding 20% higher than the floor price. In which situation would you consider doing this?

A. You want to guarantee a fixed number of impressions.
B. You want to apply frequency management to your deal.
C. You’re working across multiple publishers within a deal.
D. You’re paying in different currencies for a global ad

Answer 1

A minimum wage is a nonbinding price floor when the market equilibrium wage is higher than the legally set minimum. A living wage is a binding price floor when it is set above the market equilibrium wage, thus affecting employment conditions by requiring a higher minimum payment to workers.

Step-by-step explanation:

Under what circumstances would a minimum wage be a nonbinding price floor? This occurs when the equilibrium wage in the market is above the minimum wage set by law, which means that the wage that workers would naturally get through supply and demand is higher than the minimum wage. Therefore, since employers are already paying a wage above the minimum, the price floor is not 'binding' or affecting the market wage.

On the other hand, a living wage would be a binding price floor if it is set above the market equilibrium wage. In this scenario, the living wage acts as the lowest legal payment that can be offered to workers for their labor, leading employers to have to pay this higher wage. Because it is above what the market would typically pay (the equilibrium wage), it is 'binding' in that it constrains employers to pay at least that amount, which can result in some possible employment ramifications, such as decreased labor demand or increased labor supply leading to unemployment.