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A Study of the Effects of the Minimum Wage on Employment

question 6

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A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government of New Brunswick is considering raising the minimum wage from $10.00 per hour to $10.60 per hour.Based on this information, calculate the percentage change in the employment of low-skilled workers.Use the midpoint formula.


Definitions:

MR

Marginal Revenue, which is the additional income derived from selling one more unit of a good or service.

Marginal Revenue

Marginal revenue is the additional income generated from selling one more unit of a good or service.

Own-price Elasticity

A measure of how sensitive the quantity demanded of a good is to a change in its own price, reflecting the responsiveness of demand to price changes.

Quantity Demanded

The quantity of a product that buyers are ready and capable of buying at a specific price.

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