I can't figure out these last few questions. Please help me!
1. An increase in an effective minimum wage in a monopsony labor market will cause employment to:
A. increase.
B. decrease.
C. remain unchanged.
D. change in an unpredictable manner, depending upon the magnitude of the increase in the minimum wage.
2. Suppose that a 10% increase in the wage results in a 5% reduction in employment. In this case, labor demand is said to be:
A. elastic
B. inelastic
C. unit elastic
3. The cross-wage (cross-price) elasticity of demand between labor and capital is positive when:
A. the substitution effect is larger than the scale effect.
B. the scale effect is larger than the substitution effect.
C. the wage rises, but not when the wage decreases.
D. None of the above is correct.
4. Suppose that an effective minimum wage law is introduced into some, but not all, firms in a perfectly competitive market. It is expected that employment in the covered sector will:
A. rise.
B. fall.
C. remain unchanged.
D. change in an unpredictable manner.
I can't figure out these last few questions. Please help me!
1. An increase in an effective minimum wage in a monopsony labor market will cause employment to:
A. increase.
B. decrease.
C. remain unchanged.
D. change in an unpredictable manner, depending upon the magnitude of the increase in the minimum wage.
2. Suppose that a 10% increase in the wage results in a 5% reduction in employment. In this case, labor demand is said to be:
A. elastic
B. inelastic
C. unit elastic
3. The cross-wage (cross-price) elasticity of demand between labor and capital is positive when:
A. the substitution effect is larger than the scale effect.
B. the scale effect is larger than the substitution effect.
C. the wage rises, but not when the wage decreases.
D. None of the above is correct.
4. Suppose that an effective minimum wage law is introduced into some, but not all, firms in a perfectly competitive market. It is expected that employment in the covered sector will:
A. rise.
B. fall.
C. remain unchanged.
D. change in an unpredictable manner.