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.

---

Definitions:

Gini Coefficient

A measure ranging from 0 to 1 that indicates the degree of income inequality in a given population, with 0 expressing perfect equality and 1 indicating maximum inequality.

Income Equality

A situation in which earnings are distributed evenly across a population, minimizing the gap between the highest and lowest incomes.

European Countries

Nations located within the continent of Europe, each characterized by its own government, culture, and economic system.

Means-Tested Programs

These are government assistance programs only available to individuals who fall below a certain income level.