Refer to Scenario 1

question 62

Multiple Choice

Refer to Scenario 1.1 below to answer the questions that follow.
SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers.
-Refer to Scenario 1.1. The statement that a 1% increase in the minimum wage causes a 0.2% increase in teenage unemployment is an example of

• A) the fallacy of composition.
• B) normative economics.
• C) positive economics.
• D) Ockham's razor.

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Definitions:

Salary Workers

Employees who are paid a fixed amount of money or remuneration on a regular basis, typically monthly or annually, not hourly.

Regular Earnings

Regular earnings refer to the normal income that an employee receives from their employer, including wages or salaries before deductions or bonuses.

Overtime Pay

Additional compensation provided to employees for hours worked beyond their standard working hours.

Federal and State Income Tax

Taxes imposed by the federal and state governments on taxable income earned by individuals and corporations.