Question

A stated goal of a minimum wage is to

A.

increase business profits by making the labor market more efficient.

B.

stabilize production costs.

C.

increase government tax revenue.

D.

boost the incomes of lowminus−wage

earners.

E.

decrease business profits.

Answer 1

The correct answer is Option (D) boost the incomes of low minus−wage earners.

Explanation - The key focus of minimum wage is on demand for teenage workers as they are inexperienced coupled with the idea of boosting the income for low wage earners who are typically low skilled workers. In general, these workers have low bargaining capacity on wages and can be potentially exploited. Therefore, the objective is to have a basis minimum income so that standards of living is decent, morale of workers is high and there is a reduction in poverty in the economy.