question archive An effective minimum wage law introduced into a perfectly competitive labor market with complete coverage is expected to cause employment to: A
An effective minimum wage law introduced into a perfectly competitive labor market with complete coverage is expected to cause employment to: A
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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.
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.
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
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.
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An effective minimum wage law introduced into a perfectly competitive labor market with complete coverage is expected to cause employment to: B. fall.
Wages will reach an equilibrium point with the supply and demand of workers. An increase in wages will cause a reduction in demand for labor.
An increase in an effective minimum wage in a monopsony labor market will cause employment to: D. change in an unpredictable manner, depending upon the magnitude of the increase in the minimum wage.
The most likely outcomes will be a reduction in demand for labor or labor demands to remain relatively unchanged. There are scenarios where both wages and demand for labor could both rise, but these scenarios would be rare.
Suppose that a 10% increase in the wage results in a 5% reduction in employment. In this case, labor demand is said to be: B. inelastic
The percentage in the reduction of employment is less than the percentage of increase in wages. Therefore, this is inelastic. If the reduction in employment was greater than 10%, it would be elastic. If they were equal at 10%, the result would be unit elastic.
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.
Cross-price elasticity exists when items are substitutes for one another.
