In a 1973 Paper Entitled "A Living Wage," Published in Annals

question 64

Essay

In a 1973 paper entitled "A Living Wage," published in Annals of the American Academy of Political and Social Science vol. 409: 33-41), Daniel R. Fusfeld from the Department of Economics at the University of Michigan makes the following statement:
The only effective way to eliminate poverty in the United States is to pay all workers a living wage. As long as working people labor in jobs in which earnings are inadequate to meet even the poverty standards of income, their families will remain poor; furthermore, their poverty will be reproduced from one generation to the next. Our society will continue to suffer from all of the ills associated with poverty: disease, degradation, crime, hostility and anger. p. 35)
This essay is a normative assessment of the living or minimum) wage. In your short-answer essay, include the following elements:
a. What is the purpose of a living wage?
b. Compare and contrast the effects of a living-wage policy set in a labor market where the demand for workers is relatively price inelastic and one where it is relatively price elastic. Graph and explain your results.

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Definitions:

F.O.B. Destination

A shipping term indicating that the seller pays for transportation and is responsible for the goods until they are delivered to the buyer's location.

Merchandise Account

An account used to track the buying and selling of goods for resale in the normal course of business.

Perpetual Inventory Method

An inventory tracking system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Accounts Payable

Liabilities of a business that represent money owed to suppliers for purchases made on credit.