A Mandated Increase in Overtime Pay Is Likely to

Multiple Choice

A mandated increase in overtime pay is likely to

A) raise the average costs of labor, even if all overtime hours were eliminated.
B) cause an increase in labor hours due to the scale effect.
C) cause employers to increase straight-time hourly wages to compensate (because of the "package" agreed upon) .
D) cause an increase in labor hours due to the substitution effect.