--%>

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 : Illustrate the 4th role is the

    Illustrate the 4th role is the reallocation of resources?

  • Q : Banking crisis on checkable deposits

    Question: Some developing countries have suffered banking crises in which depositors lost part or all of their deposits (in some countries there is no deposit insurance). This type of crisis decreases depositors' confidence in the banking syst

  • Q : Theories of capital structure Write

    Write down the theories of capital structure?

  • Q : What is an Economic Territory Economic

    Economic Territory: This refers to the region of a country where there is a free movement of goods, capital and human resources.

  • Q : Facts serve to sort out good and bad

    Explain the statement: “Facts serve to sort out good and bad hypotheses.”?

  • Q : Affects the location of the production

    Explain how, if at all, each of the following affects the location of the production possibilities curve?

  • Q : Independent queue vs. pooled queue

    Instruction: McDonald's vs. Burger King - these two fast food chains use different waiting line design: Independent queue vs. pooled queue. To compare the two different queue systems on equal footing, let's assume that we pick a McDonald's sto

  • Q : Describe the term cost of capital

    Briefly describe the term cost of capital and also illustrate out its significance?

  • 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 : Fruit Question: Read the following

    Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

    Discover Q & A

    Leading Solution Library
    Avail More Than 1450930 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1926333
    Asked

    3,689

    Active Tutors

    1450930

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.