Government policies affecting the labor market
A) are necessary in order to ensure that all mutually beneficial transactions take place.
B) are often based on the positive principle that most markets (even the labor market) require governmental intervention.
C) are generally Pareto improving.
D) are often based on the normative principle that society should try to make the distribution of income more equitable.

Question

Quizplus · Accepted Answer

Government policies affecting the labor market are often based on the normative principle that society should try to make the distribution of income more equitable. This is because the labor market is not always perfectly competitive, which can lead to unequal bargaining power between workers and employers, and unequal rewards for different types of labor. Therefore, government intervention is sometimes necessary to ensure that the distribution of income is not excessively skewed towards one group or another.

Government Policies Affecting the Labor Market