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A Study of the Effects of the Minimum Wage on Employment

question 117

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 to be -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:

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to decreased costs per unit.

Network Effects

The phenomenon where the value or utility of a product or service increases as more people use it, often seen in digital and social media platforms.

Consumer Surplus

The difference between the highest price a consumer is willing to pay and the actual market price they pay.

Monopoly

A market structure characterized by a single seller or producer dominating the entire market, with no close substitutes available.

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