If employers are paid a subsidy of $0.75 per hour for hiring teenaged workers,then
A) the teenagers' wage rate will usually increase by less than $0.75 per hour.
B) the teenagers' wage rate will usually increase by more than $0.75 per hour.
C) the teenagers' wage rate will usually increase by exactly $0.75 per hour.
D) the teenagers' wage rate will usually decrease.

Question

Quizplus · Accepted Answer

The subsidy paid to employers reduces the cost of hiring teenaged workers, which may allow them to offer higher wages to attract more workers. However, the amount of the wage increase is unlikely to be an exact match to the subsidy amount. Other factors, such as the availability of other job options or the skills and experience of the teenagers, will also influence the wage rate. Therefore, it is likely that the teenagers' wage rate will increase by less than $0.75 per hour, making choice A the best option.

If Employers Are Paid a Subsidy of $0