Asked by Amaya Jones on May 21, 2024
Verified
According to some supporters of the minimum wage,it has very small or even nonexistent negative employment effects because:
A) the demand for minimum wage labor is highly elastic.
B) it reduces turnover among minimum wage workers,prompts employers to use them more efficiently,and thus raises their average productivity.
C) it encourages teenagers to stay in school.
D) employers substitute lower fringe benefits for higher pay,keeping their compensation costs the same.
Minimum Wage
The lowest hourly, daily, or monthly remuneration that employers may legally pay to workers.
Average Productivity
The total output of a production process divided by the number of units of input, measuring efficiency in using inputs to produce outputs.
- Comprehend the economic reasoning and critiques of minimum wage policies and their intended efficacy.
Verified Answer
SD
Sebastian DeodatMay 23, 2024
Final Answer :
B
Explanation :
Supporters of the minimum wage argue that it can actually increase productivity and efficiency among minimum wage workers as employers are incentivized to use them more effectively, which can offset any potential negative employment effects. This is known as the "efficiency wage hypothesis."
Learning Objectives
- Comprehend the economic reasoning and critiques of minimum wage policies and their intended efficacy.