medium · LSAT Logical Reasoning

Economists argue that increasing the minimum wage will lead to higher unemployment because small businesses, faced with higher labor costs, will be forced to reduce their staff.

This argument depends on the assumption that

  1. Small businesses cannot absorb higher labor costs by raising the prices of their goods or services.
  2. Cutting staff is the single most effective way for a business to stay profitable as its costs climb.
  3. Every small business now operating in the economy employs at least one minimum-wage worker.
  4. Unemployment is a graver economic problem than the low living standards of minimum-wage earners.
  5. A minimum-wage increase never prompts any affected business to expand its current workforce in response.

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