Minimum wage increases generate significant economic debate. Traditional economic models predict that higher minimum wages reduce employment as businesses cut jobs to manage costs. However, empirical studies of actual minimum wage increases have found mixed results—some showing job losses, others showing no significant employment effects, and some finding slight increases in employment possibly due to reduced turnover costs.
Based on the passage, it can be inferred that
economic predictions based on theoretical models may not always match real-world outcomes
minimum wage increases always reduce employment
empirical studies are less valuable than theoretical models
businesses never cut jobs in response to wage increases
Correct Answer: A
Choice A is the best answer. Model predictions and empirical findings diverge.
- Context clues: Models "predict" job losses; empirical studies show "mixed results," including no effect or increases.
- Meaning: When theory and evidence don't match, theory may be incomplete.
- Verify: The range of empirical findings shows reality is more complex than models predict.
đź’ˇ Strategy: When predictions from models don't match observations, infer limits of theoretical models.
Choice B is incorrect because some studies show no effect or even increases. Choice C is incorrect because the passage values empirical evidence as a check on theory. Choice D is incorrect because "some showing job losses" means it does happen.