Economic theory unambiguously predicts that total employment will be reduced when an effective minimum wage law is introduced:
A.
in a monopsony labor market.
B.
in a perfectly competitive labor market if all workers in this market are covered by the minimum wage law.
C.
in a perfectly competitive market, even if some workers and firms are not covered by the minimum wage law.
D.
under no circumstances
Economic theory unambiguously predicts that total employment will be reduced when an effective minimum wage law is introduced:
| A. |
in a monopsony labor market. |
|
| B. |
in a perfectly competitive labor market if all workers in this market are covered by the minimum wage law. |
|
| C. |
in a perfectly competitive market, even if some workers and firms are not covered by the minimum wage law. |
|
| D. |
under no circumstances |
Related textbook solutions
Related questions
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. |
1.An effective minimum wage law introduced into a perfectly competitive labor market with complete coverage is expected to cause employment to:
A.rise.
B.fall.
C. remain unchanged.
D.change in an unpredictable manner.
2.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.
3.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 |
4. 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. |
