Katz and Krueger found that minimum wage laws had a negligible impact on teenage unemployment in the fast-food industry. Describe the characteristics of labor demand and supply that might produce such a result
What will be an ideal response?
If worker productivity is sensitive to changes in the quantity of labor input, the marginal product of labor (demand) curve is quite steep. A small decrease in labor input makes the remaining workers much more productive — they can easily "take up the slack." In that case, a wage increase has a small impact on employment. For a minimum wage to have a small impact on unemployment, the wage must not be too attractive to potential job seekers (many of whom would fail to get a job). For many teens, the reason to get a job is either to have "some" income (rather than no income) and/or because job experience seems more valuable than alternative activities. These motivations suggest a lack of sensitivity to the real wage; a higher wage has little effect on those who were not already in the labor force.
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Which of these is a supply-side approach to increase growth?
a. Spending on the construction and repair of state highways b. Providing tax benefits to start-up companies c. Investing in the production of arms and ammunitions d. Replacing old aircrafts with new fighter planes e. Increasing transfer payments to retirees
Suppose that a bank initially has a leverage ratio of 8 to 1. If this bank increases its capital by $1 million and its assets by $10 million, then the bank's:
A. leverage and risk increases. B. risk increases and its leverage decreases. C. leverage decreases and its liabilities increase. D. liabilities decrease and its leverage increases.
How much is the MPS?
Firms operating in a market situation that creates ___________________, sell their product in a market with other firms who produce identical or extremely similar products.
A. a perfect monopoly B. perfect competition C. an oligopoly D. a free market