Suppose you were to hear an economist defend the minimum wage on the grounds that she estimated the productivity of workers both before and after an increase in the minimum wage and found that the increase in the minimum wage increases productivity by more (on a percentage basis)than it increased costs. 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 work effort argument, which posits that an increase in the minimum wage will incentivize workers to put forth more effort and increase their productivity, thus offsetting any potential negative impact of increased labor costs on employers. By estimating the increase in productivity as a percentage greater than the increase in costs, the economist is making a case that the work effort argument holds true in this scenario.

Suppose You Were to Hear an Economist Defend the Minimum