Question

Suppose that a 5% increase in the minimum wage causes a 5% reduction in employment. How would this affect employers and how would it affect workers? In your opinion, would this be a good policy?

Answer 1

Answer:

Increasing the minimum wage would not be a good policy.

Explanation:

The increase in the minimum wage would result in a spike or increase in the cost of production. The employer has to reduce the number of employees. As a result, output more than likely will be affected.

In theory, increasing the minimum wage is not a good policy.