A Senator stated that, "It is time to put people before profits; that is why I am sponsoring legislation that requires all businesses to purchase health insurance for their workers." Given that the demand for labor is more elastic than the supply of labor, what will be the result of this proposed legislation?
A) The demand for labor will increase, causing businesses to pay workers higher wages.
B) The supply of labor will decrease, causing businesses to pay workers higher wages.
C) Workers will pay for their employer-provided health insurance in the form of lower wages.
D) Firms will pay for the majority of their workers' health insurance because it is their legal obligation.

Question

Quizplus · Accepted Answer

Requiring all businesses to purchase health insurance for their workers will increase the cost of employing workers. As the demand for labor is more elastic than the supply of labor, businesses will be reluctant to pay higher wages and will instead pass on some of this cost to their workers in the form of lower wages. Therefore, workers will end up pay for their employer-provided health insurance in the form of lower wages.

A Senator Stated That, "It Is Time to Put People