The first blank is higher or lower. The second blank is unskilled or skilled. Th

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The first blank is higher or lower. The second blank is unskilled or skilled. The last blank is elastic or inelastic. Please help with this question along with an explanation. Thank you in advance.

courses.aplia.com , ] Sign in to your ac... Understanding M.. ECE-201 Lect27. MSU RO: Web Fo... Course Home Student Question 7. The Negative MindTap -Cenga.. Policies to reduc...t EC 201 section 4 8:30 Spring 2016 - Amsler Dellonie Davenport | Customer Support | Sign Out aplia Home Grades Course Materials Income Inequality and Poverty (Mobile-Enabled) Graded Assignment I Read Chapter 20 I Back to Assignment Due Thursday 04.21.16 at 11:00 PM Attempts: Score: 3 6. Policies to reduce poverty Using several types of public policies, the government has attempted to alleviate poverty, with varying success. One example is minimum wage laws An important effect of this type of policy is that it can result in higher unemployment among the workers who are affected by the minimum wage The magnitude of the change in unemployment associated with a minimum wage depends on the elasticity of demand for unskilled labor. The more elastic the demand for this type of labor, the lower the unemployment caused by the minimum wage Save & Continue Copyright NoticesT Terms of Use Privacy Notice Secu Security Notice Accessibility Session Timeout 59:42

Explanation / Answer

Most noneconomists believe that minimum wage laws protect workers from exploitation by employers and reduce poverty. Most economists believe that minimum wage laws cause unnecessary hardship for the very people they are supposed to help.

The reason is simple: although minimum wage laws can set wages, they cannot guarantee jobs. In practice they often price low-skilled workers out of the labor market. Minimum wage increases make unskilled workers more expensive relative to all other factors of production. If skilled workers make fifteen dollars an hour and unskilled workers make three dollars an hour, skilled workers are five times as expensive as the unskilled. Imposing a minimum wage of five dollars an hour makes skilled workers relatively more attractive by making them only three times as expensive as unskilled workers.

there exists a critical value of elasticity of labor demand so that increases in the minimum wage rate make low-pay workers better off for higher elasticities, but worse off for lower elasticities. This critical value decreases with unemployment benefits and increases with workers’ risk aversion.

First blank- higher

Second blank- unskilled

Third blank- elastic

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