Question

Which of the following is not correct?

a. Critics argue that minimum-wage laws hurt the very people they are intended to help.

b. Minimum-wage laws may increase unemployment among the groups of workers affected by the minimum wage.

c. If the demand for unskilled labor is relatively inelastic, the higher wage will produce more unemployment than if the demand for unskilled labor is relatively elastic.

d. Minimum-wage laws may benefit teenagers from middle-class families, so the policy is not a precise way to help the poor.

Answer 1

Option B is correct

minimum wage is responsible for creating unemployment because it increases the wage rate above the market clearing level. It imposes a minimum limit on the wage rate due to which quantity of labour demanded falls and quantity of labour supplied rises. if the demand for unskilled labour is highly inelastic then the generated unemployment will be relatively lower then if the demand is elastic. Minimum wage often hurt teenagers because they are likely to be less skilled