--%>

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 : Market Apparent program For the

    For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gi

  • Q : Price charges of firm in perfectly

    Assume that the equilibrium price within a perfectly competitive industry is $15 and a firm into the industry charges $21 there. Which of the given will occur: w) the firm's profits will rise. x) The firm's revenue will rise. y) The firm will not sell

  • Q : Who define economics as a subset of

    Economists who viewed economics like a subset of jurisprudence combined: (1) John Stuart Mill. (2) Alfred Marshall. (3) Karl Marx. (4) William Stanley Jevons. (5) Adam Smith. Hey friends please give your opinion fo

  • Q : Heterodox pricing process Compare the

    Compare the costing and pricing process of heterodox pricing process to the procedures utilized in neoclassical microeconomics to set prices.  In what ways are heterodox prices altered from neoclassical prices?

  • Q : Explain how Entrepreneurs are

    Explain how Entrepreneurs are risk-takers?

  • Q : Founder of modern economics The person

    The person along with, arguably, the top claim to the name “founder of modern economics”: (1) John Stuart Mill. (2) Karl Marx. (3) John Maynard Keynes. (4) Joan Robinson. (5) Adam Smith. Hello guys I wa

  • Q : Allocative Mechanisms-market based

    The market-based economic system: (1) Appears to be ‘natural’ as it has existed in all societies. (2) Has dominated the economic relationships in United States since from the year1492. (3) Guided resource allocation in middle ages. (4) Is

  • Q : Change in supply and a change in the

    Distinguish between a change in supply and a change in the quantity supplied?

  • Q : Need of the Economic Efficiency

    Economic efficiency for society needs which the: (i) opportunity costs of all goods be at their lowest possible values. (ii) maximum probable benefits are acquired for given costs. (iii) greatest possible net benefits are squeezed through available re

  • Q : Comparative Advantage-Mutual exchange

    Mutually beneficial exchange is probable whenever relative production costs vary previous to trade, is a manner to state the law of: (1) Positive profits from trade. (2) Comparative benefit. (3) Specialization and Division. (4) Purchasing power parity