Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?
What will be an ideal response?
Many teenage and low-skilled workers earn far less than $15 per hour. Hence a price floor in the labor market that "guaranteed" a wage of $15 per hour, that is, a minimum wage of $15 per hour, would have a double-edged effect. First, the quantity of labor supplied would increase because more people would be willing and able to work for the higher wage. Indeed, some high school students would drop out of school in order to obtain work if they thought they would be paid $15 an hour. Second, many businesses would be unwilling and unable to pay $15 per hour and would therefore lay off many teenage and low-skilled workers. In other words, the quantity of labor supplied increases and the quantity of labor demanded decreases. The resulting surplus of labor means a higher unemployment rate for the very people the minimum wage is designed to hel
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When the price of a good rises, people:
A. generally buy more of the good. B. tend to buy cheaper substitutes instead. C. rarely buy cheaper substitute goods instead. D. typically do not decrease their consumption of the good.
Suppose the price of a football is $20.00 and the price of a basketball is $10.00. The ________ of a football is ________
A) relative price; 2 basketballs per football B) relative price; 1/2 basketball per football C) opportunity cost; $20.00 D) opportunity cost; $10.00
The least responsive to interest rate changes is the ____ demand for money.
A. transactions B. precautionary C. speculative
Investment A pays $1,200 half of the time and $800 half of the time. Investment B pays $1,400 half of the time and $600 half of the time. Which of the following statements is correct?
A. Investment A and B have the same expected value, but A has greater risk. B. Investment A has a greater expected value than B, but B has less risk. C. Investment B has a higher expected value than A, but also greater risk. D. Investment A and B have the same expected value, but A has lower risk than B.