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Question
The minimum wage is an ineffective antipoverty measure for all EXCEPT which of the following reasons?
a. The wage ceiling created by minimum wage laws falls below the equilibrium price, producing a shortage of labor.
b. The wage mandated by law often exceeds the value created by low-skill workers, resulting in a move away from labor-intensive processes.
c. The wage floor created by minimum wage laws lies above the equilibrium price, producing a surplus of labor.
d. Increased wages can force small businesses, who are less able to adapt to changes in costs, to close their operations, reducing the total quantity of jobs.
e. An increase in wages may cause employees to lose working hours, resulting in a net change in pay that is negative.
Answer
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Related questions
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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