Question 1

In the U.S.sugar market

Accepted Answer

U.S. sugarcane is more expensive than in Canada due to protective tariffs and quotas that limit imports, keeping domestic prices higher.

Question 2

If a price ceiling or price floor existed where one lives,would he or she be willing to purchase products on the black market? What would he or she identify as a consequence to engaging in transactions on the black market over the short run and the long run?

Accepted Answer

The answer of If a price ceiling or price floor...

Question 3

Why are the long-run consequences of a price control different from the short-run consequences of a price control? Be specific,and consider both price floors and price ceilings in your answer.

Accepted Answer

The answer of Why are the long-run consequences of a...

Question 4

What is a black market? Under what conditions does such a market emerge? How do the prices charged on the black market compare to the conditions that exist in the legal market?

Accepted Answer

The answer of What is a black market? Under what...

Question 5

What wage system will dominate?

Accepted Answer

In general, the federal government's minimum wage law sets a baseline for minimum wages in each state. However, if a state's minimum wage law is higher, that state law will dominate and take precedence over the federal law. This is due to the Supremacy Clause of the Constitution, which states that state laws take precedence over federal laws when there is a conflict between the two.

Question 6

Why is raising the minimum wage generally ineffective?

Accepted Answer

The minimum wage is generally ineffective because it is often set below the prevailing equilibrium wage, meaning that it is already a non-binding price floor. This means that employers are already paying their employees more than the minimum wage and increasing it would have little to no effect on their wages. Additionally, some employers may choose to cut back on hiring or reduce hours to compensate for the increased labor costs.

Question 7

Let's say that Esther is a politician who promises cheaper gasoline for everyone in the country if she is elected.Once she is elected,she makes gas cheaper by imposing a price ceiling that is one full dollar less than the market's equilibrium price.What would be the reaction of the sellers of gasoline and of the public to Esther's price ceiling law? Would she expect to be reelected in the long run?

Accepted Answer

The answer of Let's say that Esther is a politician...

Question 8

Explain why a shortage occurs in a market where a binding price ceiling exists.Does a price ceiling improve the operation of the market?

Accepted Answer

The answer of Explain why a shortage occurs in a...

Question 9

Discuss why any society would want a binding price floor law on a commodity such as corn.Who would benefit? Who would suffer? If it is the case that more suffering is caused by the presence of a price floor law,why does it remain in effect?

Accepted Answer

The answer of Discuss why any society would want a...

Question 10

When market participants are allowed through their interactions to find the price,there will be equilibrium where the quantity supplied by buyers equals the quantity supplied by sellers.If this is the case,why does the government intervene in certain markets by imposing a price floor? Why does the government intervene in certain markets by imposing a price ceiling? Which market participant (the buyer or the seller)will lobby the government to secure passage of a binding price floor? Which one will lobby for a binding price ceiling?

Accepted Answer

The answer of When market participants are allowed through their...

Question 11

Why is it that price gouging laws (laws intended to place a temporary limit on the price that can be charged in a time of emergency)do not help those who are affected by the emergency that triggered the law?

Accepted Answer

The answer of Why is it that price gouging laws...

Question 12

Use the following table to answer the following questions.
 
-At what price level does the labor market experience its largest surplus?

Accepted Answer

A labor market surplus occurs when the supply of labor exceeds the demand for labor. This typically happens at higher wage levels, where fewer employers are willing to hire at that rate, leading to unemployment. $8.00 is the highest price level listed, likely resulting in the largest surplus.

Question 13

Use the following table to answer the following questions.
 
-If a minimum wage is set at $5.50,what is the amount of disequilibrium in the labor market?

Accepted Answer

The answer of Use the following table to answer the...

Question 14

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original,legal market price.What would be the positive and negative consequences to such a law?

Accepted Answer

The answer of Some states and localities have laws that...

Question 15

How would an economist explain a teenager's continued unemployment where there exists a minimum wage?

Accepted Answer

The minimum wage law can lead to a situation where the quantity of labor (people willing to work) at that wage exceeds the quantity of labor demanded by employers. This can result in unemployment for some workers, including teenagers, as employers are not willing or able to hire everyone who is willing to work at the minimum wage.

Question 16

Use the following table to answer the following questions.
 
-If a minimum wage is established at $7.50,what would be the amount of disequilibrium in the labor market?

Accepted Answer

According to the table, at a minimum wage of $7.50, the quantity of labor supplied is 142,170,000, while the quantity of labor demanded is 122,000,000. This means there is a surplus of labor in the market, which is equal to the difference between the quantity supplied and the quantity demanded, or 20,170,000. Therefore, the correct answer is B, there would be a surplus of labor of 20,170,000.

Question 17

Which of the following is true,holding all other things constant,when comparing regions that impose a higher minimum wage to regions that impose a lower minimum wage?

Accepted Answer

In economic terms, a price control becomes binding when it is set above the equilibrium price, causing a surplus or shortage. For minimum wage, if it is set above the market-clearing level (where supply meets demand), it becomes binding, leading to potential unemployment or labor surplus. Conversely, if the minimum wage is below the equilibrium, it's nonbinding, as the market wage is naturally higher. Thus, in regions with a higher minimum wage, the control is more likely to be binding, affecting employment and wages, while in regions with a lower minimum wage, the control is nonbinding, allowing market forces to dictate wages.

Question 18

In the South African labor market

Accepted Answer

In the South African labor market, workers have begged the government to allow below-minimum wage factories to stay open, reasoning that any job is better than no job. This suggests that the minimum wage is seen as a barrier to employment, and workers may prefer to have a job that pays less than the minimum wage rather than no job at all. Choices A, B, and D are not supported by evidence and choice E cannot be true if the minimum wage is said to be a barrier to employment.

Question 19

As a politician,you would be more inclined to propose an increase in the minimum wage when you believe that the new minimum wage would

Accepted Answer

An increase in the minimum wage that remains below the equilibrium wage would be nonbinding, meaning it would not affect the labor market, as employers are already paying above this rate.

Question 20

In a 1973 paper entitled "A Living Wage," published in Annals of the American Academy of Political and Social Science (vol.409: 33-41),Daniel R.Fusfeld from the Department of Economics at the University of Michigan makes the following statement:

The only effective way to eliminate poverty in the United States is to pay all workers a living wage.As long as working people labor in jobs in which earnings are inadequate to meet even the poverty standards of income,their families will remain poor; furthermore,their poverty will be reproduced from one generation to the next.Our society will continue to suffer from all of the ills associated with poverty: disease,degradation,crime,hostility and anger.
 
This essay is a normative assessment of the living (or minimum)wage.In your short-answer essay,include the following elements:
a.What is the purpose of a living wage?
b.Compare and contrast the effects of a living-wage policy set in a labor market where the demand for workers is relatively price inelastic and one where it is relatively price elastic.Graph and explain your results.

Accepted Answer

The answer of In a 1973 paper entitled "A Living...

Quiz 6: Price Controls