Suppose you were to hear an economist defend the minimum wage on the grounds that she estimated that the demand for labor is nearly vertical, you would know her to be relying on the ____ argument.
A)macroeconomic
B)elasticity
C)work effort
D)consumer and producer surplus

Question

Quizplus · Accepted Answer

The economist is relying on the concept of elasticity, which refers to the responsiveness of supply or demand to changes in price. If the demand for labor is nearly vertical, it means that an increase in the minimum wage would result in a relatively small decrease in employment, suggesting that the labor market is relatively inelastic. This argument suggests that a minimum wage increase would not have significant negative effects on employment.

Suppose You Were to Hear an Economist Defend the Minimum