--%>

Assertion to increase in the minimum wage

Use the circular flow model to confirm this assertion for a $1 per hour increase in the minimum wage?

E

Expert

Verified

This will increase costs of some businesses immediately and most businesses eventually, as better paid labor demands and gets what it considers its rightful historic percentage premium over the minimum wage.  This will shift businesses’ supply curve to the left, leading to a decreased demand for resources though total business costs paid to labour will likely have increased.  With increased income, labor households will most likely increase consumption by more than the decrease of capitalist households (those getting at least part of their income as rents, interest, and profits).  Thus flow of goods and services to household’s increases as does flow, receipts of businesses from households.

The distribution of income will be toward labor.  There will be increased wages—especially for the lowest paid workers.  There will also be a small reallocation of resources towards labour.  Unemployment may rise for the lowest paid workers and so will prices.

   Related Questions in Business Economics

  • Q : Unpredictable and frequent fluctuations

    Adam Smith attributed unpredictable and frequent fluctuations within profits to: (i) variations in the prices of the goods a firm or person produces and sells. (ii) the bad or good fortune of rivals. (iii) the good or bad fortune of customers. (iv) tr

  • Q : The market system provides such a

    Explain the statements: The market system provides such a variety of desired goods and services precisely.

  • Q : What does financial leverage specify

    What does financial leverage specify? And also states its limitations?

  • Q : Determine the productively efficiency

    To be productively efficient, a country should: (w) maximize the satisfaction attainable from its budget. (x) be concerned only with macroeconomic analysis. (y) concentrate on removing scarcity. (z) maximize the value of output produced through specif

  • Q : Determine the relative cost of a product

    If banana divides are $2, CD disks are $10, and SCUBA vacations are $360, then what is the relative cost of a SCUBA vacation in phrases of a CD disk: (i) 36 disks. (ii) 360 disks. (iii) 180 disks. (iv) 20 disks. (v) 3,600 disks.

    Q : State of good or service at last unit

    Which of the given describes a situation in which each good or service is produced up to the point where the last unit gives a marginal benefit to consumers equivalent to the marginal cost of producing this? w) productive efficiency.

  • Q : Characterized contestable markets

    Industries that are described as "contestable": (w) will experience long-run economic profits equal to zero. (x) are difficult for firms to enter, but not to exit. (y) are difficult for firms to exit, but not to enter. (z) will charge prices greater t

  • Q : Best alternatives while choices are made

    Opportunity costs, which are the values of the: (i) monetary costs of goods and services. (ii) best alternatives sacrificed while choices are made. (iii) minimal budgets of families upon welfare. (iv) hidden charges passed upon to consumers. (v) exorb

  • Q : Explain about the principle of

    Economic efficiency needs that, relative to the other goods which different individuals might consume, the people who value exact goods relatively the most should own and/or use all goods. Such principle is termed as: (i) economic equity. (ii) allocat

  • Q : Circular flow model to confirm this

    Use the circular flow model to confirm this assertion for the construction of a new high school in Blackhawk county?