How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?
What will be an ideal response?
The more elastic the demand for labor, the greater the deadweight loss from increasing the minimum wage. Essentially, the more elastic the demand for labor, the larger the decrease in the quantity of labor demanded when the minimum wage rate rises. As a result, the larger the decrease in employment and hence the greater is the deadweight loss.
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By engaging in trade and acting in their own self interest, World War II POWs were following the economic principle of
A) division of labor. B) international trade. C) voluntary exchange. D) comparative advantage.
The belief that the regulators of the U.S. financial system would not tolerate any losses by depositors at large depository institutions is called
A) the too-big-to-fail doctrine. B) the regulatory capture hypothesis. C) the lender of last-resort doctrine. D) corporate banking system welfare.
According to convergence theory, countries that start out poor should initially grow:
A. faster than ones that start out rich, but will eventually slow to the same growth rate. B. slower than ones that start out rich, but will eventually grow to the same growth rate. C. faster than ones that start out rich, and will eventually surpass their level of income. D. slower than ones that start out rich, and therefore will never reach a similar growth rate.
A budget deficit will be least inflationary if the aggregate
a. demand curve is very steep. b. demand curve is very flat. c. supply curve is very flat. d. supply curve is very steep.