Why Is Raising the Minimum Wage Generally Ineffective

question 14

Multiple Choice

Why is raising the minimum wage generally ineffective?

• A) Most employers purchase labor on the black market,where the binding price floor is not present.
• B) The minimum wage is an amount suggested by the government,and employers are under no obligation to pay their employees the suggested basic wage.
• C) The minimum wage is usually set below the prevailing equilibrium wage and is frequently nonbinding.
• D) Employees are often unconcerned with their wages and care more about the benefits that come with the job.
• E) Most employees who hold low-wage jobs work in the black market,where the binding price floor doesn't exist.

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Definitions:

Innovative Firms

Companies that specialize in creating new products or services through research, development, and technology.

Further Innovation

involves the continuous process of making improvements or introducing new methods, ideas, or products beyond current advancements.

Expected-Rate-of-Return Curve

A graph depicting the expected returns on investment as a function of the level of risk.

MB = MC Decision Framework

A decision-making principle where optimal allocation of resources is achieved when marginal benefit equals marginal cost.