A2 Economics: Supply Side policies and Economic growth in 11mins

[navigatro]

Very good! Thank you.

[polvotierno]

Think about something... you say that the minimum wage should be lowered and that businesses will then be more productive..

then you say that subsidies can reward inefficient firms resulting in poor allocation of resources..

now think... if you lower the minimum wage too much... you end up rewarding inefficient firms leading to poorer productivity..

This was the original idea behind establishing a minimum wage... industry actually becomes more productive through socially efficient wages