Refer to Scenario 1

question 128

Multiple Choice

Refer to Scenario 1.1 below to answer the question(s) that follow.
SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers.
-Refer to Scenario 1.1. The statement, "the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers," is an example of

• A) marginal economics.
• B) normative economics.
• C) positive economics.
• D) Ockham's razor.

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Definitions:

Oligopolistic Firms

are companies operating in a market structure characterized by a small number of firms controlling a large market share, leading to limited competition.

Rival Firms

Companies that compete against one another in the same market for consumers or resources.

ATC

Average Total Cost, which is the total cost of production divided by the total quantity produced, indicating the average cost per unit.

Territorial Division

The division or partitioning of land or space into separate areas, often for administrative or legal purposes.