What are the effects of an increase in the minimum wage? Who would be most affected?
What will be an ideal response?
An increase in the minimum wage induces the quantity supplied of labor to increase and the quantity demanded of labor to fall, generating a surplus or an increase in unemployment. Since minimum wage legislation tends to affect lower skilled workers the most, the lowest skilled workers are most likely to be unemployed. These are often minority teenagers.
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Based on the above figure showing a budget line, which of the following combinations of soda and bottled water are not affordable?
A) 3 bottles of water and 4 cans of soda B) 4 bottles of water and 2 cans of soda C) 2 bottles of water and 6 cans of soda D) None of the above, that is, all the combinations listed are affordable.
When a tax is imposed on a good for which both demand and supply are very elastic, a. sellers effectively pay the majority of the tax
b. buyers effectively pay the majority of the tax. c. the tax burden is equally divided between buyers and sellers. d. None of the above is correct; further information would be required to determine how the burden of the tax is distributed between buyers and sellers.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
(Last Word) Because there are so many sources of carbon dioxide, making monitoring difficult and costly, many economists:
A. prefer a carbon tax to cap-and-trade for reducing carbon dioxide emissions. B. prefer cap-and-trade to a carbon tax for reducing carbon dioxide emissions. C. believe that cap-and-trade and a carbon tax are both costly but should be implemented to reduce carbon dioxide emissions. D. believe that neither cap-and-trade nor carbon taxes can effectively reduce carbon dioxide emissions.