Multiple Choice
The elasticity of demand for employees is -0.50.It is also estimated that the existing minimum wage (price floor) has increased the raise the wage by 25% above equilibrium wage.How much would the employment change if the price floor was eliminated?
A) Employment would decrease by 12.5%.
B) Employment would increase by 12.5%.
C) Employment would decrease by 25%.
D) Employment would increase by 25%.
Correct Answer:
Verified
Correct Answer:
Verified
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