What is the likely effect of a significant increase in minimum wage on employment levels in sectors with low profit margins and high labor costs? A. Employment levels would significantly increase. B. Employment levels would remain relatively unchanged. C. Employment levels would decrease. D. Employment levels would initially decrease but then significantly increase as the market adjusts.

What is the likely effect of a significant increase in minimum wage on employment levels in sectors with low profit margins and high labor costs? A. Employment levels would significantly increase. B. Employment levels would remain relatively unchanged. C. Employment levels would decrease. D. Employment levels would initially decrease but then significantly increase as the market adjusts.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How does the amount of employment created by an increase in the minimum wage depend on the elasticity of labor demand? Group of answer choices: a. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more elastic. b. When the demand for labor is more elastic, raising the minimum wage has no impact on employment. c. When the demand for labor is more inelastic, raising the minimum wage has no impact on employment. d. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more inelastic.
"In light of the concept of 'supply and demand,' explain how a significant increase in the minimum wage might impact employment levels and product prices in a competitive market. Consider both short- term and long-term effects, and discuss any potential differences in impact across various sectors of the economy."
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