Question

For a given increase in the minimum wage, which of the following would likely result in a larger decrease in teenage employment?

      
Teenager labor represent a small fraction of the cost of making goods.

       
Teenagers produce goods in which demand is inelastic (i.e., the output demand curve is relatively steep).

       
Teenage workers are close substitutes with older workers who are paid more than the minimum wage.

Answer 1

Ans Only first option would decrease teenage employment

Explanation

Ans Teenages 17.12.19911 Teenager labour represent a small fraction of the cost of making goods would result in a larger decrease in teenage employment because if there will be less fraction of teenager take part in the production then bargening power or teenage labour union power will be minimal in raising voice for labour justic and wage rate. This would discourage and teso possibility of increase in wage rate in future which leads to reduction in employment in future. of teenagers.

(ii) and (iii) are not true

Explanation

leenagers produced goods in which demand a is inelastic would never result in a larger decrease in teenage employment because price of these good would never decrease a and producer never stop the production a of such goods. so producer never fire teenagers. Teenage workers are close substitute with older worker who are paid more than the minimum wage would increase the teenage employment