Suppose that McDonald’s hires workers at the minimum wage and that the minimum w

Question

Suppose that McDonald’s hires workers at the minimum wage and that the minimum wage is increased from $7.50 per hour to $9.00 per hour. Assuming McDonald’s is a competitive firm, what would the effect of this change on McDonald’s? Circle or identify all that are correct.

      a.         The number of workers hired by McDonald’s would decrease.

      b.         The number of workers hired by McDonald’s would remain the same, but costs                              would increase.

      c.         The marginal cost of producing burgers by McDonald’s would increase.

      d.         The marginal product of McDonald’s workers would be higher.

            e.         None of the above is correct.

Explanation / Answer

a, The number of workers hired by McDonald’s would decrease.

c. The marginal cost of producing burgers by McDonald’s would increase.

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