"If its advocates are correct, the minimum-wage bill passed by the House of Representatives would raise wages for nearly 7 million underpaid workers, but would have no noticeable effect on employment." The quotation implies that the demand for the labor services of the 7 million workers mentioned, with respect to the price of labor services, has elasticity equal to:
A)2.
B)5.
C)1.
D)0.
E).5

Question

Quizplus · Accepted Answer

The quotation implies that the demand for labor is perfectly inelastic (elasticity equal to 0) because it suggests that an increase in wages (price of labor services) would not reduce the quantity of labor demanded (employment).

"If Its Advocates Are Correct, the Minimum-Wage Bill Passed by the House