Question

Suppose that the government raises the permissible minimum wage to $15 per hour.

Which of the following describes a secondary effect that will likely result from this action?

a The rise in the minimum wage will lead to a reduction in the employment of low-skill workers.

b The rise in the minimum wage will lead to a drastic fall in the poverty rate in the country.

c The rise in the minimum wage will improve the training opportunities available to low-skill workers.

d The rise in the minimum wage will lead to an increase in the quality of all goods and services produced.

Answer 1

Answer to the question:

Option a: The rise in the minimum wage will lead to a reduction in the employment of low-skill workers.

Explanation: The minimum wage intends to raise the income of the low wage earners. But, this also raises the cost of production of the firms and that causes the firms to employ less labour force. In this process the firms will try to reduce the employment of the low-skilled workers. When the minimum wage reduces employment of low-skilled worker, then the minimum wage fail to meet its objective.

Hope, I solved your query. Give good feedback.

Comment, I'll get back to you ASAP.

Stay safe. Thank you.