Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 4, Problem 4.3.9PA
To determine
The impact of raising minimum wages on employment and poverty.
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Does raising the minimum wage reduce
employment, that is, does it increase job loss? Who
benefits the most from an increase in the minimum
wage? What effect might your answers have on the
normative analysis of the minimum wage?
draw a graph with this difinitions
To visualize the impact of the minimum wage on the labor market, I have created an original graph (see below). This graph depicts a hypothetical labor market before and after an increase in the minimum wage.
[Please insert your original graph here.]
In the graph, the x-axis represents the quantity of labor, and the y-axis represents the wage rate. The blue curve (labeled "Initial Equilibrium") represents the initial labor market equilibrium, where the supply of labor (S) intersects with the demand for labor (D) at point A, determining the initial wage rate and employment level.
The red curve (labeled "After Minimum Wage Increase") illustrates the impact of a minimum wage hike. When the government imposes a higher minimum wage, it acts as a price floor (represented by the horizontal line). This results in a new equilibrium at point B, where the wage rate is higher, but employment is lower compared to the initial equilibrium.
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18. Normative and positive statements
The following table contains statements that provide some analysis of policies that address the minimum wage.
Categorize each of these statements as either positive or normative.
Statement
Positive
Normative
All Americans should earn more than $25,000 per year.
Raising the minimum wage increases the rate of unemployment.
The minimum wage should be raised to $15 per hour.
Raising the minimum wage reduces the number of employment opportunities for low skilled workers.
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Chapter 4 Solutions
Microeconomics (7th Edition)
Ch. 4.A - Prob. 1RQCh. 4.A - Prob. 2RQCh. 4.A - Prob. 3RQCh. 4.A - Why would economists use the term deadweight loss...Ch. 4.A - Prob. 5PACh. 4.A - Prob. 6PACh. 4.A - Prob. 7PACh. 4.A - Prob. 8PACh. 4.A - Prob. 9PACh. 4 - Prob. 1TC
Ch. 4 - Prob. 2TCCh. 4 - Prob. 4.1.1RQCh. 4 - Prob. 4.1.2RQCh. 4 - Prob. 4.1.3RQCh. 4 - Prob. 4.1.4RQCh. 4 - Prob. 4.1.5PACh. 4 - Prob. 4.1.6PACh. 4 - Prob. 4.1.7PACh. 4 - Prob. 4.1.8PACh. 4 - Prob. 4.1.9PACh. 4 - Prob. 4.1.10PACh. 4 - Prob. 4.1.11PACh. 4 - Prob. 4.1.12PACh. 4 - Prob. 4.1.13PACh. 4 - Prob. 4.1.14PACh. 4 - Prob. 4.2.1RQCh. 4 - Prob. 4.2.2RQCh. 4 - Prob. 4.2.3PACh. 4 - Prob. 4.2.4PACh. 4 - Prob. 4.2.5PACh. 4 - Prob. 4.2.6PACh. 4 - Prob. 4.2.7PACh. 4 - Prob. 4.2.8PACh. 4 - Prob. 4.2.9PACh. 4 - Prob. 4.2.10PACh. 4 - Prob. 4.3.1RQCh. 4 - Prob. 4.3.2RQCh. 4 - Prob. 4.3.3RQCh. 4 - Prob. 4.3.4RQCh. 4 - Prob. 4.3.5PACh. 4 - Prob. 4.3.6PACh. 4 - Prob. 4.3.7PACh. 4 - Prob. 4.3.8PACh. 4 - Prob. 4.3.9PACh. 4 - Prob. 4.3.10PACh. 4 - Prob. 4.3.11PACh. 4 - Prob. 4.3.12PACh. 4 - Prob. 4.3.13PACh. 4 - Prob. 4.3.14PACh. 4 - Prob. 4.3.15PACh. 4 - Prob. 4.3.16PACh. 4 - Prob. 4.3.17PACh. 4 - Prob. 4.3.18PACh. 4 - Prob. 4.3.19PACh. 4 - Prob. 4.4.1RQCh. 4 - Prob. 4.4.2RQCh. 4 - Prob. 4.4.3RQCh. 4 - As explained in the chapter, economic efficiency...Ch. 4 - Prob. 4.4.5PACh. 4 - Prob. 4.4.6PACh. 4 - Prob. 4.4.7PACh. 4 - Prob. 4.4.8PACh. 4 - Prob. 4.4.9PACh. 4 - Prob. 4.4.10PACh. 4 - Prob. 4.2CTE
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Similar questions
- Find an article on either the current or attempts to raise the minimum wage. Briefly summarize the article. Are there any positive effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both? Are there any negative effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both? Do you support a $15/hour minimum wage? Explain your reasons. Did the article influence your thinking at all? Don't forget to cite your sources.arrow_forwardWhat is an analytical device used to model welfare economic theory.arrow_forwardConsidering the level of the US minimum wage is should be the minimum wage in the US is Positive; normative Normative; positive economics; considering what economics.arrow_forward
- On page 104 of the third (2019) edition of Naked Economics by Charles Wheelan, Wheelan discusses the possible outcomes of minimum wage. Based on what Wheelan has written and the conversations about minimum wage in the class, which of the below statements is the LEAST likely to be correct if the minimum wage (a price floor) is placed well above the market clearing (equilibrium) wage? Group of answer choices The higher the minimum wage is set above the market clearing or equilibrium rate the more likely it is benefit all workers, as everyone's wages will have increased, and employers will not lay off workers because of the higher wages. The higher minimum wage will benefit those who continue to have a job at the higher wage, but will hurt those who are laid off because employers will hire fewer workers at the higher wage rate. In an era of global production and a global labor pool in which wages in the U.S. are higher than the wages paid to workers in countries such as Mexico, the…arrow_forwardIn economics, the difference between normative and positive is that:arrow_forwardConsider the optimizing behavior of people from Chapter 6. Why is early childhood intervention so effective at reducing poverty? The article addresses this in the chapter that starts with "Studies of the dynamics of human skill formation..." Chapter 6 Production, Cost, and Market Models Survey of Economics v2.0 Libby Rittenberg and Timothy Tregarthenarrow_forward
- What did mercantilism see as the economic goal for society? Why was poverty seen as essential? Give one paragraph (short) explanation for the above question.arrow_forwardPlease give two examples of market distortion, how do they affect the market efficiency? Explain in welfare economics.arrow_forwardPositive or Normative?arrow_forward
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