1.2.6 Government Intervention

Question 1

Reasons for minimum wage

Answer 1

Raise income for low paying workers
Reduce inequalities and increase fairness
As income rises, workers pay more tax, so more revenue for the government.
Motivation for workers to they work harder- more productive- boosts the economy
May invest for money on training

Question 2

Supply of workers

Answer 2

Amount of individuals willing to work

Question 3

Advantages

Answer 3

Increase the income of low paid
Increases demand in the economy- more supply- more output- more GDP- more money for government
Reduces labor turnover
Increase labor productivity- the higher wage will motivate them

Question 4

Disadvantages

Answer 4

Increases costs for firms
If costs become too high they might have to cut on workers
Increase unemployment
More workers replaced with machinery- unemployment