Question 1

A price floor

Accepted Answer

A price floor is a government-imposed minimum price that must be charged for a good or service. If the price floor is set above the equilibrium price, it creates a surplus because suppliers will produce more than consumers are willing to buy at that price. Therefore, the price and quantity will change. It does not create a black market because the government has set the minimum price higher than the market price.

Question 2

-The figure above shows the labor market in a region.If a minimum wage of $8 an hour is imposed,then there are ________ unemployed workers.

Accepted Answer

The answer of 
-The figure above shows the labor market...

Question 3

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

Accepted Answer

A price floor set above the equilibrium price ($5 instead of $4) leads to a surplus, where the quantity supplied exceeds the quantity demanded because producers are willing to supply more at the higher price, but consumers are not willing to buy as much.

Question 4

Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour.An increase in the minimum wage to $7.50 per hour leads to

Accepted Answer

Since the new minimum wage ($7.50) is below the current equilibrium wage ($8.60), it will not affect the equilibrium condition. Employers are already paying more than the new minimum wage, so there's no reason for the quantity supplied or demanded to change.

Question 5

One result of a minimum wage is

Accepted Answer

The answer of One result of a minimum wage is
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Question 6

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000.If the minimum wage is set at $7.50 per hour,then the

Accepted Answer

The minimum wage of $7.50 per hour is lower than the equilibrium wage rate of $9.00 per hour, so there is no effect on the quantity of apricot pickers employed. The market is still willing to hire 14,000 apricot pickers at $9.00 per hour, and the minimum wage of $7.50 per hour is not binding. Therefore, the quantity of apricot pickers employed does not change.

Question 7

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

Accepted Answer

Imposing a minimum wage of $8 an hour would create the largest amount of unemployment because it sets the wage above the equilibrium point, leading to a surplus of labor (more people are willing to work at this higher wage than there are jobs available).

Question 8

Why do some workers lose their job when the minimum wage is increased?

Accepted Answer

When the minimum wage is increased, it raises the cost of labor for businesses. As a result, businesses may choose to hire fewer workers to offset the higher costs, leading to a decrease in the quantity of labor demanded. This can lead to some workers losing their jobs as employers may choose to automate certain tasks or restructure their business to require fewer employees.

Question 9

-The figure above shows the labor market in a region.For a minimum wage to change the wage rate and amount of employment,it must be

Accepted Answer

For a minimum wage to impact the wage rate and employment levels, it must be set above the equilibrium wage rate. In this case, if the equilibrium wage (where supply equals demand) is $6 an hour, setting the minimum wage above this amount (option B) would directly affect both the wage rate and the amount of employment, as it would force employers to pay more than the market rate, potentially leading to reduced employment.

Question 10

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

Accepted Answer

The answer of 
-The labor demand and labor supply schedules...

Question 11

A stated goal of a minimum wage is to

Accepted Answer

The stated goal of a minimum wage is to boost the incomes of low-wage earners, so they can afford basic necessities and improve their quality of life. It does not necessarily increase government tax revenue, stabilize production costs, or decrease business profits. While there may be arguments that a minimum wage makes the labor market more efficient and improves business profits in the long run, this is not its primary goal.

Question 12

In the labor market,as wages rise,households

Accepted Answer

The answer of In the labor market,as wages rise,households
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Question 13

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

Accepted Answer

An increase in the minimum wage to $7.50 will only cause unemployment in Little Rock where the current equilibrium wage is below $7.50. In St. Louis and Raleigh, the equilibrium wages are already at or above $7.50, so the minimum wage increase would not directly cause unemployment there.

Question 14

-The figure above shows the labor market in a region.If a minimum wage of $8 an hour is imposed,then the quantity of labor supplied is ________ and the quantity of labor demanded is ________.

Accepted Answer

When a minimum wage of $8 an hour is imposed, it typically results in a higher quantity of labor supplied than the equilibrium quantity because more people are willing to work at the higher wage. However, employers demand less labor at this higher wage than at the equilibrium wage, leading to a surplus of labor. Therefore, the quantity of labor supplied increases to 80,000, while the quantity of labor demanded decreases to 40,000.

Question 15

A minimum wage increases unemployment by

Accepted Answer

According to the law of demand, when the price (in this case, the wage rate) of a good or service (labor) increases, the quantity demanded of that good or service decreases. Therefore, when the minimum wage increases, employers are less willing to hire as many workers because it becomes more expensive to do so, leading to a decrease in the quantity of labor demanded and potentially causing unemployment.

Question 16

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $9 per hour is imposed,

Accepted Answer

The answer of 
-The labor demand and labor supply schedules...

Question 17

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000.If the minimum wage is set at $7.50 per hour,then the

Accepted Answer

The minimum wage of $7.50 per hour is above the equilibrium wage of $7.00 per hour, which means that employers will be unwilling to hire as many apricot pickers as before (since labor becomes more expensive). Thus, the quantity of apricot pickers employed will decrease.

Question 18

One result of the minimum wage is

Accepted Answer

If the minimum wage is set above the market wage rate, employers may choose to hire workers off the books, paying them less than the minimum wage. This creates a black market for labor that pays less than the minimum wage.

Question 19

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,the

Accepted Answer

A price floor set above the equilibrium price ($5 instead of $4) causes the quantity supplied to exceed the quantity demanded because producers are willing to supply more at the higher price, but consumers are not willing to buy as much at that price, leading to a surplus.

Question 20

In a competitive labor market,a minimum wage law set above the equilibrium wage rate

Accepted Answer

When a minimum wage law is set above the equilibrium wage rate, it creates a surplus of labor. This is because the quantity of labor supplied exceeds the quantity of labor demanded at the higher wage rate, resulting in a surplus of workers who are willing to work but cannot find a job.

Quiz 7: Government Actions in Markets