Suppose a State Has Adopted a Minimum Wage Requirement of $18

question 12

Multiple Choice

Suppose a state has adopted a minimum wage requirement of $18 per hour with the goal of improving the lives of those working low-skilled jobs. After a few years of this minimum wage increase, the state is experiencing higher rates of unemployment, especially among low-skilled labor. The state evaluates its options and decides to repeal the minimum wage law and lower the minimum wage to $11.50, which they feel will help fix unemployment and give them time to seek other options. What is this law an example of?

• A) an effective use of the laboratory of democracy
• B) strengthening liberty of individuals
• C) inaction and a lack of accountability
• D) relying on the judicial system to resolve problems

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Definitions:

Efficient Input Use

Utilization of inputs in a manner that maximizes the output or minimizes the cost under given technology and constraints.

MRTS

The Marginal Rate of Technical Substitution measures the rate at which one input can be substituted for another input in the production process, while keeping output constant.

Pareto Optimality

A distribution of resources where no one can be made better off without causing detriment to at least one other person.

Utilities Possibilities Frontier

A graphical representation that shows the maximum number of goods or services that two countries can produce using their resources efficiently.