For a given labor supply, would the potential unemployment impact of an increase in the minimum wage be greater in the case of elastic or inelastic demand for labor? Explain.
The minimum wage rate is the rate that is required for the sustain of life. It is fixed by the government to shelter the labor. When the minimum wage is higher than the equilibrium wage rate, then unemployment will increase.
Answer and Explanation: 1
Elastic demand says that when a small price change leads to a large change in quantity demand. Here, price is treated as wage rate so, when a...
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fromChapter 6 / Lesson 6
Understand the effect of minimum wage on employment. Study wage employment graphs and how they work, and discover pros and cons of minimum wage increase effects.