a. Explain the difference between a ‘minimum wage’ and a ‘living wage’.

b. What should governments use to base calculations of wage rates for the lower paid? Justify your response.

c. Proponents of the living wage argue that firms have a moral duty to pay it but that there are also benefits to firms of higher productivity and lower absenteeism as well as improved recruitment and retention. Critics argue that holding the wage rate above market equilibrium causes unemployment. What side of the argument do you agree with most?

Explain your reasoning.