Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. This means that
A)an increase in the minimum wage would increase the total incomes of teenage workers as a group.
B)an increase in the minimum wage would decrease the total incomes of teenage workers as a group.
C)the unemployment effect of an increase in the minimum wage would be relatively large.
D)the cross elasticity of demand between teenage and adult workers is positive and very large.

Question

Quizplus · Accepted Answer

When the price elasticity of demand for teenage workers is relatively inelastic, it means that employers' demand for teenage workers does not decrease significantly with an increase in wages. Therefore, an increase in the minimum wage would likely increase the total incomes of teenage workers as a group, because the higher wages paid to each worker would outweigh any small decrease in employment.

Studies of the Minimum Wage Suggest That the Price Elasticity