Question 1

Those that lose from an increase in the minimum wage are

Accepted Answer

When there is an increase in the minimum wage, employers may choose to lay off workers in order to compensate for the higher labor costs. Therefore, workers that are laid off are the ones who lose from the increase in the minimum wage. Option A and D are incorrect because not all workers are affected and consumers may actually benefit from higher wages as it may boost consumer spending. Option B is partially correct, as some workers may keep their jobs, but it does not capture the full picture of those who lose their jobs.

Question 2

Suppose you were to hear a politician defend the minimum wage on the grounds that workers would be happier and more productive with a higher minimum wage, you would know this person to be relying on the ____ argument.

Accepted Answer

The argument presented by the politician is related to the work effort theory, which suggests that higher wages motivate workers to work harder and be more productive. This theory is often associated with discussions around the minimum wage and its impact on the labor market. The other options (macroeconomic, elasticity, consumer and producer surplus) do not directly relate to the argument presented by the politician.

Question 3

Those that gain from an increase in the minimum wage are

Accepted Answer

Only workers who keep their jobs benefit from an increase in the minimum wage as they receive higher wages. Employers may face higher labor costs and potentially reduce hours or layoffs to offset these costs. Consumers may also face higher prices for goods and services due to increased labor costs. Therefore, the statement "all workers" (A) and "consumers who pay lower prices for goods" (D) are incorrect.

Question 4

Suppose you were to hear an economist defend the minimum wage on the grounds that she estimated that when she estimated the saving rate of minimum wage workers and found it to be much smaller than the savings rate of employers. You would know her to be relying on the ____ argument.

Accepted Answer

The economist is using a macroeconomic argument by comparing the savings rate of minimum wage workers and employers. This argument looks at the bigger picture of the economy rather than just the individuals or specific market factors (such as elasticity or consumer and producer surplus). The work effort argument would focus on the impact of the minimum wage on the effort and productivity of workers.

Question 5

The rule-of-thumb among many economists suggests that a 10% increase in the minimum wage results in a ________ in the number of jobs held by teens.

Accepted Answer

The most widely accepted estimate suggests that a 10% increase in the minimum wage results in a 1% to 3% reduction in the number of jobs held by teens. Therefore, the best option is D.

Question 6

Suppose you were to hear an economist oppose the minimum wage on the grounds that she estimated the loss to small businesses and to the unemployed and found that it exceeded the gain to workers getting a higher wage. You would know her to be relying on the ____ argument.

Accepted Answer

The economist is estimating the loss in producer surplus (small businesses) and consumer surplus (unemployed) and comparing it to the gain in producer surplus (workers getting higher wage) which is an example of using producer and consumer surplus analysis. Therefore, the answer is D.

Question 7

Those that lose from an increase in the minimum wage are

Accepted Answer

Employers are the ones who may lose from an increase in the minimum wage as they will have to pay their employees more. This can lead to higher labor costs, potentially leading to higher prices for goods and services, or even job losses if the employer cannot afford to pay the higher wages. Workers who keep their jobs may benefit from an increase in the minimum wage, while consumers who pay lower prices for goods are not directly affected by changes in the minimum wage.

Question 8

The majority of minimum wage workers are

Accepted Answer

According to the Bureau of Labor Statistics, the majority of minimum wage workers (about 50%) are between the ages of 16 and 24, and they are not typically the primary breadwinners or supporting families. About 24% are between the ages of 25 and 34, and only about 8% are 55 years old or older.

Question 9

Suppose you were to hear a politician oppose the minimum wage on the grounds that it would hurt employers and employees (who lost their jobs)more than it would help those who earned a higher wage, you would know this person to be relying on the ____ argument.

Accepted Answer

The argument is based on the concept of consumer and producer surplus, where the imposition of a minimum wage could lead to a loss in surplus for employers (producers) and employees (consumers) who might lose their jobs, outweighing the benefits to those who receive higher wages.

Question 10

The "work effort argument" criticizing traditional economic analyses of the minimum wage implies

Accepted Answer

The "work effort argument" suggests that increasing the minimum wage can lead to higher productivity and effort from workers, potentially increasing real GDP.

Question 11

If the cost of living is higher in richer cities than in poorer cities, and the nominal minimum wage were the same in every city, then the real purchasing power of the minimum wage would necessarily be

Accepted Answer

The real purchasing power of the minimum wage would be higher in poorer cities because the cost of living is lower there, allowing the same amount of money to buy more goods and services compared to richer cities where the cost of living is higher.

Question 12

-In Figure 33.1, how many people would lose their jobs as a result of the minimum wage?

Accepted Answer

The answer of 
-In Figure 33.1, how many people would...

Question 13

The heart of the argument against an increase in the minimum wage is one based on

Accepted Answer

The answer of The heart of the argument against an...

Question 14

If you view a dollar's worth of consumer surplus (received by employers)equal to a dollar's worth of producer surplus (received by employees)then the minimum wage usually

Accepted Answer

The minimum wage typically results in a decrease in consumer surplus (as it raises the cost of labor, potentially leading to higher prices for goods and services) and an increase in producer surplus (as it directly benefits employees with higher wages). However, the overall effect is often negative due to job losses and reduced employment opportunities, making D the correct choice.

Question 15

The heart of the argument against an increase in the minimum wage is that

Accepted Answer

The heart of the argument against an increase in the minimum wage is that the net gain to workers is less than the loss to firms. Proponents of this argument say that increasing the minimum wage would cause firms to cut jobs, reduce hours and/or benefits, and raise prices to compensate for the increased cost of labor. Ultimately, they argue that the net gain for workers is small or non-existent and that the costs of the policy outweigh the benefits.

Question 16

Suppose you were to hear a politician defend the minimum wage on the grounds that the low-wage workers would spend more of their extra income that wealthier employers would and therefore the effect would be positive, you would know this person to be relying on the ____ argument.

Accepted Answer

The argument presented by the politician is a macroeconomic argument which suggests that increasing the minimum wage will have a positive effect on the overall economy by increasing aggregate demand.

Question 17

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.

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.

Question 18

The "elasticity argument" criticizing traditional economic analyses of the minimum wage implies that

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.

Question 19

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.

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.

Question 20

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.

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.

Quiz 33: Minimum Wage

Those that lose from an increase in the minimum wage are

Suppose you were to hear a politician defend the minimum wage on the grounds that workers would be happier and more productive with a higher minimum wage, you would know this person to be relying on the ____ argument.

Those that gain from an increase in the minimum wage are

Suppose you were to hear an economist defend the minimum wage on the grounds that she estimated that when she estimated the saving rate of minimum wage workers and found it to be much smaller than the savings rate of employers. You would know her to be relying on the ____ argument.

The rule-of-thumb among many economists suggests that a 10% increase in the minimum wage results in a ________ in the number of jobs held by teens.

Suppose you were to hear an economist oppose the minimum wage on the grounds that she estimated the loss to small businesses and to the unemployed and found that it exceeded the gain to workers getting a higher wage. You would know her to be relying on the ____ argument.

Those that lose from an increase in the minimum wage are

The majority of minimum wage workers are

Suppose you were to hear a politician oppose the minimum wage on the grounds that it would hurt employers and employees (who lost their jobs) more than it would help those who earned a higher wage, you would know this person to be relying on the ____ argument.

The "work effort argument" criticizing traditional economic analyses of the minimum wage implies

If the cost of living is higher in richer cities than in poorer cities, and the nominal minimum wage were the same in every city, then the real purchasing power of the minimum wage would necessarily be

-In Figure 33.1, how many people would lose their jobs as a result of the minimum wage?

The heart of the argument against an increase in the minimum wage is one based on

If you view a dollar's worth of consumer surplus (received by employers) equal to a dollar's worth of producer surplus (received by employees) then the minimum wage usually

The heart of the argument against an increase in the minimum wage is that

Suppose you were to hear a politician defend the minimum wage on the grounds that the low-wage workers would spend more of their extra income that wealthier employers would and therefore the effect would be positive, you would know this person to be relying on the ____ argument.

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.

The "elasticity argument" criticizing traditional economic analyses of the minimum wage implies that

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.