We know that the minimum wage causes unemployment. So, why does the government impose a minimum wage?
What will be an ideal response?
The main reason for the minimum wage is because its supporters outnumber its opponents. Some supporters, such as labor unions, have a self-interested motivation for seeing a high minimum wage. A high minimum wage increases the cost of low-skilled labor, which is a substitute for high-skilled union labor. Hence firms decrease the quantity of low-skilled labor they demand and increase their demand for union labor, thereby increasing the employment and wages of union labor. Other supporters point to the fact that the minimum wage helps raise the incomes of low-skilled workers who retain jobs. Also, if the demand and supply of low-skilled workers is inelastic, the resulting unemployment will be low and so supporters might believe that helping some low-skilled workers is worth harming others.
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The most important determinant of price elasticity of supply is
a. price elasticity of demand b. technological conditions such as how rapidly costs increase when a firm increases its output c. whether the production process relies heavily on capital or on labor d. the number and closeness of available substitutes e. whether the product is a normal good or an inferior good
An example of structural unemployment is a(n):
a. textile worker who quits one job and waits for the new job to begin. b. engineer permanently laid off due to advances in technology. c. computer programmer who becomes rich and leaves the labor force. d. All of these.
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. If the exchange rate between apples and oranges in international markets is 1 ton of oranges per 3 tons of apples: a. Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges to other
countries. b. Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples to other countries. c. Karl and Adam will trade apples and oranges with one another. d. Karl and Adam will not specialize or engage in international trade.
In which of the following countries has economic growth been sufficiently high that income would double every ten years?
a. Singapore b. Nigeria c. India d. Indonesia