Question

comparison of the minimum wage and the median wage can be used to estimate the extent to which unemployment results from minimum wage laws. all else equal, which scenario would result in the most unemployment? a country where the minimum wage is set at 95% of the median wage. a country where the minimum wage is set at 60% of the median wage. a country where the minimum wage is set at 10% of the median wage. a country where the minimum wage is set at 1% of the median wage.

Explanation:

When the minimum wage is set closer to the median wage, it creates a larger gap between the cost of labor (due to the minimum wage) and what employers might otherwise pay (closer to the median in a free - market scenario without such a high minimum). A higher minimum wage relative to the median wage makes labor more expensive for employers. As a result, employers may cut back on the number of workers they hire to control costs, leading to more unemployment. Among the options, 95% is the highest proportion of the minimum wage to the median wage.

Answer:

A. A country where the minimum wage is set at 95% of the median wage.