Economist: As should be obvious, raising the minimum wage significantly would make it more expensive for businesses ...

Allison on June 14 at 06:04PM

A v B

I got stuck between A and B and I did choose A because I though it was better than B. The word profit in A confused me because it was not mentioned in the stimulus but between the two it seemed the best. Is the reason why B is wrong because skilled worked are irrelevant or because they are not mentioned in the stimulus? I just want to make sure I understand this so I don’t waste too much time on something like this again.

1 Reply

Shunhe on June 15 at 02:49PM

Hi @AllisonJ,

Thanks for the question! (B) is wrong because we don’t know anything about skilled workers’ wages, and so we can’t say anything about the difference between minimum wage workers’ and skilled wage workers’ wages. (B) only applies when this difference is small, and since we don’t know anything about it, we can’t say that (B) weakens the economist’s argument, since we don’t even know if the sufficient condition is true. Also, the second part having to do with percentage skilled vs. non skilled worker doesn’t tell us anything about whether unemployment increases or not, since it just tells us about the allocation of employed workers.

As for (A), although profits aren’t explicitly mentioned, we know that if profits are super adversely affected, then businesses might not be able to employ as many people; this is a reasonable inference to make.

Hope this helps! Feel free to ask any other questions that you might have.