Question

Under what elasticity conditions would the following be true? "Increasing the minimum wage will result in a decrease in employment for workers who now earn less than the new minimum wage."

Answer 1

Answer:

The elasticity of labor is elastic (low elastic).

Explanation:

The given situation or condition, the rise in minimum wage will lead to decrease the employment for the person who earns lower than new minimum wage shows that the labor demand is elastic or elasticity for the labor is low because the increase in the minimum wage lead discourages to the producer to hire unskilled labor. Therefore, employment will decrease with an increase in the minimum wage.