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A Study of the Effects of the Minimum Wage on Employment

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Essay

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 is considering raising the minimum wage from $7.25 per hour to $7.75 per hour.Based on this information, calculate the percentage change in the employment of low skilled workers.Use the midpoint formula.


Definitions:

Synergistic Effects

The enhanced outcome or benefit that results when two or more entities (such as companies or products) combine their efforts or resources.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or undervalued.

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating the portion of a company's profit allocated to each share of stock.

Acquisition

The act of obtaining control of another corporation, either through purchase or merger.

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