Ava states, "If raising the minimum wage to $10 an hour is good, like Senator Largess suggests, then raising it to $20 an hour would be twice as good." Is Ava correct? Why or why not?
The minimum wage is a price floor that causes unemployment when it is established above the market-clearing wage for unskilled workers. If the equilibrium wage in this market is $4 an hour and the minimum is $10, workers who aren't worth at least this much to the firm will not be hired. If it is raised to $20, even fewer workers will find jobs. We could suggest that raising the minimum wage is bad, but it would be hard to say that raising it to $20 would be twice as bad. Bads are hard to quantify, and all of this is beyond the value-free world of positive economics. Raises of this nature in the minimum wage will increase unemployment. It is up to the individual to decide if this is good or bad.
You might also like to view...
In a market economy, government decides the answers to the three economic decisions
a. True b. False Indicate whether the statement is true or false
Economic efficiency entails getting the smallest amount of output from a given level of input of scarce resources.
Answer the following statement true (T) or false (F)
If Germany's Real GDP falls, this tends to ______________ United States exports, shifting the United States AD curve to the ________________
A) raise; right B) raise; left C) lower; right D) lower; left
If income rises by 10 percent and the quantity sold of a particular vehicle falls by 7 percent, then this particular type of vehicle is
A. An inferior good. B. A normal good. C. An irregular good. D. A substandard good.