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Author Question: What are the effects of a minimum wage set below the equilibrium wage? What will be an ideal ... (Read 86 times)

newbem

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on: Jun 29, 2018
What are the effects of a minimum wage set below the equilibrium wage?
 
  What will be an ideal response?

Question 2

Why is it a bad business practice to assume that raising prices will lead to increases in total revenue?
 
  What will be an ideal response?


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yuyiding

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Reply #1 on: Jun 29, 2018
Answer to Question 1

If the minimum wage is set below the equilibrium wage, then the law has no impact on the labor market equilibrium wage and quantity.

Answer to Question 2

The reason is that revenue could move in either direction. What is crucial in determining whether it will rise or fall is dependent upon the elasticity of demand at the point where price is increased.


newbem

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

bitingbit

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Reply 3 on: Yesterday
Excellent

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