Refer to Scenario 1

question 34

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 an increase in the minimum wage causes an increase in teenage unemployment is an example of

• A) a fallacy.
• B) an economic theory.
• C) normative economics.
• D) deductive reasoning.

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Definitions:

Cancer-Causing Particles

Substances or elements that, upon exposure, increase the risk of developing cancer in living tissues.

Plastic Containers

Durable and versatile containers made from plastic materials used for storing, packaging, or transporting goods.

Demand Decrease

A situation in which the quantity of a good or service sought by buyers falls due to factors such as changes in taste, income, or prices of substitutes.

Excess Demand

A situation where the quantity demanded of a product exceeds the quantity supplied at a given price.