The "elasticity argument" criticizing traditional economic analyses of the minimum wage implies that
A)any increase in employment greatly reduces the marginal productivity of employed workers.
B)any increase in employment greatly increases the marginal productivity of employed workers.
C)the short-run marginal productivity of workers is independent of the number of workers employed.
D)patriotic employers should want to pay their American employees more than their foreign employees.

Question

Quizplus · Accepted Answer

The elasticity argument states that in the short run, an increase in the minimum wage decreases the demand for labor, resulting in a decrease in employment. This suggests that the marginal productivity of each worker will actually increase when the number of workers employed decreases, which contradicts choice A. Additionally, the elasticity argument does not suggest that patriotic employers should pay American employees more than their foreign employees, making choice D irrelevant. Therefore, the correct answer is C, which suggests that short-run marginal productivity is independent of the number of workers employed.

The "Elasticity Argument" Criticizing Traditional Economic Analyses of the Minimum