| Line 109: |
Line 109: |
| | #impact of improvement in technology on the production by a firm | | #impact of improvement in technology on the production by a firm |
| | #adjusting inputs to minimize the overall cost at a constant level of output | | #adjusting inputs to minimize the overall cost at a constant level of output |
| − | #minimum wage and effect on competition for labor | + | #the effect of minimum wage on the competition for labor |
| | #comparing the cost of an input (usually labor) relative to the additional revenue that results | | #comparing the cost of an input (usually labor) relative to the additional revenue that results |
| | #adjusting an input in response to an increase in the price of the product | | #adjusting an input in response to an increase in the price of the product |
| Line 125: |
Line 125: |
| | 2. "adjusting inputs to minimize the overall cost at a constant level of output" | | 2. "adjusting inputs to minimize the overall cost at a constant level of output" |
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| − | 3. "minimum wage and effect on competition for labor" | + | 3. "the effect of the minimum wage on the competition for labor" |
| | + | |
| | + | :Increasing the minimum wage has the effect of increasing unemployment. Workers who have jobs make more money when the minimum wage is increased, but firms can afford to hire fewer people. The number of the unemployed (the people who cannot get jobs) increases when the minimum wage is increased. |
| | + | |
| | + | :Also, although this will never be asked on a CLEP exam, raising the minimum wage causes more high school students to drop out and pursue jobs rather than stay in school, which would enable them to obtain higher-paying jobs in the future. |
| | + | |
| | + | :Sometimes the CLEP exam will twist the question about minimum wage to obscure its harmful effect, by asking what happens when the labor supply increases when there is a minimum wage. The answer is the same: unemployment increases. |
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| | 4. "comparing the cost of an input (usually labor) relative to the additional revenue that results" | | 4. "comparing the cost of an input (usually labor) relative to the additional revenue that results" |