Refer to Scenario 1

question 184

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 that a 1% increase in the minimum wage causes a 0.2% increase in teenage unemployment is an example of

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

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Definitions:

Standard of Value

A criterion that allows the value of various goods and services to be compared.

Store of Value

A store of value is an asset that maintains its value over time without depreciating, allowing it to be saved, retrieved, and exchanged at a later time.

Medium of Exchange

A mediating tool or mechanism that enables the buying, selling, or exchanging of products among individuals or groups.

Standard of Deferred Payment

A function of money that allows for goods and services to be paid for at a future date.