Under What Elasticity Conditions Would The Following 794747

Under What Elasticity Conditions Would The Following Be Trueincre

1. Under what elasticity conditions would the following be true? "Increasing the minimum wage will result in a decrease in employment for workers who now earn less than the new minimum wage."

This outcome occurs when the demand for low-wage labor is elastic, meaning employers are highly responsive to wage increases and will reduce employment significantly. If demand is inelastic, employment levels are less affected by wage hikes.

2. The market for gasoline has changed in a couple significant ways over the last few years: new technologies have decreased the costs associated with producing gasoline, and automobiles are becoming more fuel efficient. Describe how these changes affect the supply of and demand for gasoline. What is the overall effect on equilibrium price? Exam questions 50 words each.

Paper For Above instruction

The elasticity of demand for low-wage labor determines employment effects following minimum wage increases. When demand is elastic, an increase in minimum wage leads to a significant decrease in employment because employers cut back on hiring or reduce hours. Conversely, if demand is inelastic, employment declines minimally. The elasticity of supply also matters, but demand elasticity strongly influences employment outcomes. For gasoline markets, technological advancements lowering production costs shift the supply curve outward, increasing supply. Simultaneously, more fuel-efficient vehicles reduce demand for gasoline, shifting the demand curve inward. The combined effects—an increased supply and decreased demand—lead to a lower equilibrium price for gasoline. The net price change depends on the magnitude of these shifts but generally favors a decrease in gasoline prices due to improved efficiency and cost reductions. These market changes reflect how technological progress and consumer preferences influence supply-demand dynamics in energy markets.

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