Assume that we are in a long-run environment and a firm employs two groups ofworkers, medium-skilled and low-skilled (there is no capital used by this firm). Low-skilled workers are paid $7.25 per hour, whereas medium-skilled workers are paid $17. Assume that both groups of workers are normal inputs into the production process and the government increases the minimum wage to $15. Workers in the medium-skilled group are happy because they believe that the firm will increase their work hours now. Are the medium-skilled workers correct in their assessment? Explain why or why not
Assume that we are in a long-run environment and a firm employs two groups ofworkers, medium-skilled and low-skilled (there is no capital used by this firm). Low-skilled workers are paid $7.25 per hour, whereas medium-skilled workers are paid $17. Assume that both groups of workers are normal inputs into the production process and the government increases the minimum wage to $15. Workers in the medium-skilled group are happy because they believe that the firm will increase their work hours now. Are the medium-skilled workers correct in their assessment? Explain why or why not
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that we are in a long-run environment and a firm employs two groups ofworkers, medium-skilled and low-skilled (there is no capital used by this firm). Low-skilled workers are paid $7.25 per hour, whereas medium-skilled workers are paid $17. Assume that both groups of workers are normal inputs into the production process and
the government increases the minimum wage to $15. Workers in the medium-skilled
group are happy because they believe that the firm will increase their work hours now.
Are the medium-skilled workers correct in their assessment? Explain why or why not.
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