TA: Samantha Wong
16 March 2012
Homework 7: Chapters 19 – 20
19.2) As explained in Chapter 6, a minimum-wage law distorts the market for low-wage labor.
To reduce this distortion, some economists advocate a two-tiered minimum-wage system, with a
regular minimum wage for adult workers and a lower, “subminimum” wage for teenage
workers. Give two reasons a single minimum wage might distort the labor market for teenage
workers more than it would the market for adult workers.
19.7) A current debate in education is whether teachers should be paid on a standard pay scale
based solely upon their years of training and teaching experience, or whether part of their
salary should be based upon their performance (called “merit pay”).
a. Why might merit pay be desirable?