If the Elasticity of Labor Demand Is Greater Than One

question 42

Multiple Choice

If the elasticity of labor demand is greater than one, then imposing a minimum wage above the equilibrium wage will cause:

• A)the firms' total wage bill to fall.
• B)employment to rise.
• C)the firms' total wage bill to rise.
• D)no adverse employment effects.

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Definitions:

Price Discrimination

An approach where the same goods or services, either identical or very similar, are priced differently by the same seller in distinct markets.

Inelastic Demand

A situation where the demand for a good or service changes little when its price changes, indicating consumers' lack of sensitivity to price adjustments.

Price Discrimination

Price discrimination involves selling the same product or service at different prices to different groups of consumers, often based on factors like age, location, or purchase quantity.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, representing their economic benefit.