Question 1

-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 2

-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 3

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

Since the minimum wage is now set at $7.50 per hour and the equilibrium wage rate for apricot pickers is $7.00 per hour, this means that the minimum wage is now above the equilibrium wage rate. As a result, the cost of hiring apricot pickers will increase for firms, and they will choose to hire fewer apricot pickers. This will lead to a decrease in the quantity of apricot pickers employed, resulting in a shift to the left along the demand curve for apricot pickers, and a decrease in the equilibrium quantity of apricot pickers employed.

Question 4

One result of a minimum wage is

Accepted Answer

The answer of One result of a minimum wage is
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Question 5

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 6

-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 7

One result of the minimum wage is

Accepted Answer

When the minimum wage is set above the market wage rate, firms may not be able to afford to hire as many workers as they would like. As a result, some workers may turn to the black market, where they can be paid less than the minimum wage. This creates a surplus of labor, which lowers the market wage rate and increases unemployment among low-skilled workers.

Question 8

A minimum wage increases unemployment by

Accepted Answer

According to the law of demand, an increase in the price of a good or service (in this case, labor) will lead to a decrease in the quantity demanded. Therefore, an increase in the minimum wage (which is effectively a price floor for labor) will lead to a decrease in the quantity of labor demanded by firms. This means that some workers who were previously employed may lose their jobs, thereby increasing unemployment.

Question 9

-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 10

A stated goal of a minimum wage is to

Accepted Answer

The main goal of a minimum wage is to boost the incomes of low-wage earners by establishing a wage floor that ensures workers are paid a fair wage for their labor. It is aimed at reducing poverty and promoting greater economic equality. Other options such as A and D are not direct goals of a minimum wage and B and E are only potential side effects.

Question 11

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

The current equilibrium wage rate for housekeepers is already higher than the proposed minimum wage, so there will be no change in the market for housekeepers. This means that there will be no surplus or shortage of housekeepers, and no increase in the quantity of housekeepers supplied. It is also unlikely to lead to unemployment of housekeepers.

Question 12

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 is below the equilibrium wage rate, so it will not affect the quantity of apricot pickers employed. However, some apricot pickers may be unemployed if they are unable to find a job at the minimum wage.

Question 13

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 14

-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 15

In the labor market, as wages rise, households

Accepted Answer

The answer of In the labor market, as wages rise,...

Question 16

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

Accepted Answer

When the minimum wage is increased, the cost of labor increases for employers. As a result, some employers may reduce the number of workers they hire or lay off existing workers to cut costs, thereby decreasing the quantity of labor demanded. This can lead to job losses for some workers.

Question 17

-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 18

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

If the current equilibrium wage rate for landscapers is $6.65 in Little Rock and the minimum wage is increased to $7.50, then it is likely that employers would choose to hire fewer landscapers and unemployment in Little Rock would increase. However, since the current equilibrium wage rate in St. Louis is already $7.50, an increase in the minimum wage would not have much effect on employment in St. Louis. Similarly, since the current equilibrium wage rate in Raleigh is already higher than the new minimum wage, an increase in the minimum wage would not have an effect on employment in Raleigh. Therefore, the correct answer is D - only Little Rock.

Question 19

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

Accepted Answer

Setting a minimum wage above the equilibrium wage rate means that the wage rate is higher than what employers are willing to pay and thus creates a surplus of labor, or unemployment. This is because the supply of labor (people willing and able to work at the higher wage rate) exceeds the demand for labor (employers who are willing and able to pay the higher wage rate).

Question 20

A price floor

Accepted Answer

A price floor is a government-imposed minimum price that is set above the equilibrium price. This creates a surplus of goods, as producers supply more than consumers demand at the higher price. This surplus can lead to a decrease in prices as producers try to get rid of excess goods, and a decrease in quantity supplied as producers cut back on production due to lower profits. Therefore, a price floor changes the price and quantity if it is set above the equilibrium price. It may also create a black market if the price floor is set high enough to incentivize illegal sales at lower prices, but that is not always the case.

Quiz 7: Government Actions in Markets