For a given increase in the minimum wage,which of the following would likely result in a smaller decrease in teenage employment?
A) Teenage workers are close substitutes with older workers who are paid more than the minimum wage.
B) Teenagers produce goods that have a high price elasticity of demand.
C) Teenager labor represents a small fraction of the cost of making goods.
D) Teenagers are paid so little that the minimum wage increases their wage more.

Question

Quizplus · Accepted Answer

When teenager labor represents a small fraction of the cost of making goods, an increase in the minimum wage would have a less significant impact on the overall cost structure of producing goods. Therefore, employers might be less inclined to reduce teenage employment significantly in response to the wage increase.

For a Given Increase in the Minimum Wage,which of the Following