Question

Create a real or hypothetical question that could be addressed with positive analysis regarding a microeconomics issue that affects your household or your firm.

An example of a microeconomics question that could be addressed with positive analysis is:

“How would an increase in the Federal minimum wage to $12/hour increase impact the cost of childcare in the US?” An interesting follow-up question would be: “How will an increase in minimum wages affect decisions by working parents to use childcare services?” Microeconomics applies to these topics because they are concerned with actions of individual households and businesses and prices in individual markets (labor and childcare labor). These questions are not seeking an opinion, but rather seek to understand the potential consequences of an increase in wages for childcare workers.

Answer 1

An over all increase in Federal minimum wage to $12/hour in the economy would undoubtedly lead to increase in income for more than 1 million families in the country. It could well reduce poverty by a staggering 14%, according to a congressional budget office report on minimum wage.

However, when we look at the impact of an increase in minimum wage for child care workers. The policy would lead to millions of low-income families, who are completely reliant on child - care providers for taking care of their children while they work, choose to either stay at home for taking care of their kids, or they could expect to see a drastic fall in their income, which in turn would have ripple effects on many other sectors of the economy.

Therefore, if the government wants to bring in the federal minimum wage policy, it must account for child care sector as well, as without any intervention, it would negatively impact the entire economy.