Two Economists Can Agree That Raising the Minimum Wage Creates

question 234

Essay

Two economists can agree that raising the minimum wage creates unemployment yet one might argue that raising the minimum wage is a good policy and the other that it is a bad policy. Why can this difference exist? Be sure to use the terms positive and normative in your answer.

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Definitions:

Utility Function

A mathematical representation of a consumer's preference system, ranking different bundles of goods and services by their levels of satisfaction.

Indifference Curve

A graph that represents different bundles of goods among which a consumer is indifferent, showing levels of consumption where the consumer has no preference for one combination over another.

Apples And Bananas

Commonly used examples in economics to represent two different goods in various economic models and theories.

Utility Function

A mathematical representation of how a set of goods and services are ranked according to their utility, or satisfaction, to the consumer.