Suppose you were to hear a politician defend the minimum wage on the grounds that it would not cause that much unemployment because firms have to hire a certain number of workers, you would know this person to be relying on the ____ argument.
A)macroeconomic
B)elasticity
C)work effort
D)consumer and producer surplus

Question

Quizplus · Accepted Answer

The politician is relying on the argument that the demand for labor is inelastic, meaning that even if the cost of labor (minimum wage) increases, firms will still need to hire the same number of workers. This argument is based on the concept of elasticity, which measures how responsive demand or supply is to changes in price. The other choices (macroeconomic, work effort, consumer and producer surplus) do not directly relate to the argument the politician is making.

Suppose You Were to Hear a Politician Defend the Minimum