Studies of the Minimum Wage Suggest That the Price Elasticity

question 295

Multiple Choice

Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. This means that

• A)an increase in the minimum wage would increase the total incomes of teenage workers as a group.
• B)an increase in the minimum wage would decrease the total incomes of teenage workers as a group.
• C)the unemployment effect of an increase in the minimum wage would be relatively large.
• D)the cross elasticity of demand between teenage and adult workers is positive and very large.

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Definitions:

Bonds at Par Value

Bonds that are sold or traded at their original issuing price or face value.

Equity Financed

Refers to the method of raising capital for a business by selling ownership shares in the company, as opposed to incurring debt.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.

Equity Financed

The method of funding a business through selling shares of the company to investors, thus raising capital without incurring debt.