Describe the scale effect in the scenario

Reference no: EM132200803

Question: Suppose Oregon proposes indexing the minimum wage to inflation. In the space below, summarize what it would mean to index the minimum wage to inflation, and then describe the substitution and scale effects you anticipate with this policy? (In your response, assume that the minimum wage is an effective price floor and that both factor and product markets are perfectly competitive.)

1. What does it mean to index a minimum wage to inflation?

2. Describe the scale effect in this scenario.

3. Describe the anticipated substitution effect in this scenario.

Reference no: EM132200803

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