Question: Use the news clip in Problem.

a. If the Malaysian government cut the tax on business profits, would it offset the effect of the minimum wage on employment? Explain.

b. Would a cut in the social security tax that small businesses pay offset the effect of the higher minimum wage on employment? Explain.

Problem: Malaysia Passes Its First Minimum Wage Law About 3.2 million low-income workers across Malaysia are expected to benefit from the country's fi rst minimum wage, which the government says will transform Malaysia into a high-income nation. Employer groups argue that paying the minimum wage, which is not based on productivity or performance, would raise their costs and reduce business profi ts.

On a graph of the market for low-skilled labour, show the effect of the minimum wage on the quantity of labour employed.