As a firm's labor costs rise, the firm should mitigate the cost increase by substituting away...
Question:
As a firm's labor costs rise, the firm should mitigate the cost increase by substituting away from labor. What does this mean, in regard to increase in minimum wages?
Minimum Wage:
Minimum wage is a type of price floor, and is often used as a policy tool to improve earnings of low-income workers. Many economists argue that minimum wage instead reduces employment.
Answer and Explanation: 1
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View this answerThis means that minimum wage will likely lead to reduced employment. This the market forces work in a way to reduce the efficiency of minimum wage,...
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What is a Minimum Wage? - Definition & History
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Chapter 7 / Lesson 12
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Understand the minimum wage definition in economics. Discover the history of minimum wage in the U.S., and explore the advantages and disadvantages of imposing a minimum wage. Learn the difference between federal and state minimum wage.
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