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:

Par Value

A nominal or face value assigned to a security or stock, which may bear no relation to its market value.

Paid-In Capital

The sum of funds that a corporation has obtained from investors in return for stock shares.

Legal Capital

The portion of a company's equity that cannot legally be distributed to shareholders, often equating to the par value of the issued shares.

Common Stock

Represents equity ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.