The debate on the effects of raising the minimum wage is ongoing. A few years ago,Seattle, Los Angeles, and San Francisco passed laws to gradually raise the minimum wage to $15/hour.Beaudry, Paul, David A. Green, and Ben M. Sand (investigated the possible effects of these laws on the labor market and concluded that "...for workers below $10 per hour in Seattle, the employment rate declines by over 10 percent in response to raising the minimum wage to $15. Meanwhile, for the larger group with wages at or below $15, the decline is approximately 7 percent."

The authors' conclusion is consistent with the specific economic theory discussed in the course that

Selected Answer: a and c

Answers: price floor set below market equilibrium price leads to excess demand (shortage)

price floor has no effect regardless ofwhere it is set relative to market equilibrium

price floor set above equilibrium price leads to excess supply (surplus)

a and c