Economics: The Basics 1st Edition by Mike Mandel

Exercise 3

Many CEOs of large corporations have enormous pay packages in the tens of millions of dollars per year. Such high pay helps contribute to income inequality because the vast majority of people earn much less. Suppose Congress passed a law that saying that the annual pay for any job could not exceed $500,000 per year.
a) What effect would this law have on the market for corporate executives?
b) Do you think such a law makes sense? Why or why not?