Question 2: Monopsony (20 Points)
Courtesy of Brian Albrecht in the blog ”Economic Forces” on February 16th.
James Buchanan, Nobel Prize winner in economics in 1986, reacted to the Card and Krueger findings that a minimum wage increase might have increased em- ployment as follows:
The inverse relationship between quantity demanded and price is the core propo- sition in economic science, which embodies the presupposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that “water runs uphill,” no self-respecting economist would claim that increases in the minimum wage increase employment.
Discuss this claim using the tools on monopsony developed in class. Do you agree with Buchanan’s claim that no self-respecting economists would claim that increases in the minimum wage increase employment?
Question 2: Monopsony (20 Points)
Courtesy of Brian Albrecht in the blog ”Economic Forces” on February 16th.
James Buchanan, Nobel Prize winner in economics in 1986, reacted to the Card and Krueger findings that a minimum wage increase might have increased em- ployment as follows:
The inverse relationship between quantity demanded and price is the core propo- sition in economic science, which embodies the presupposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that “water runs uphill,” no self-respecting economist would claim that increases in the minimum wage increase employment.
Discuss this claim using the tools on monopsony developed in class. Do you agree with Buchanan’s claim that no self-respecting economists would claim that increases in the minimum wage increase employment?