Question 1

The graph below represents the market for walnuts.Identify the values of the marginal benefit and the marginal cost at the output levels of 2,000 pounds,4,000 pounds,and 6,000 pounds.At each of these output levels,state whether output is inefficiently high,inefficiently low,or economically efficient.

Accepted Answer

The answer of The graph below represents the market for...

Question 2

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Accepted Answer

The answer of The graph below represents the market for...

Question 3

Rent control is an example of

Accepted Answer

Rent control is a government-imposed price ceiling on the amount of rent that landlords can charge for their rental properties. It is intended to help low-income tenants afford housing, but can lead to reduced quality and quantity of available housing, as landlords may have decreased incentives to maintain or upgrade their properties.

Question 4

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.If a minimum wage of $11.50 is mandated there will be a

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 5

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.Suppose that the quantity of labor supplied increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

To find the new free market equilibrium hourly wage and quantity of labor, we need to look at the intersection of the new supply curve (which has shifted to the right by 40,000 at each wage level) and the original demand curve.

At the original supply levels, the equilibrium wage was $9.50 and the equilibrium quantity of labor was 570,000.

With a 40,000 increase in supply at each wage level, the new supply curve shifts to the right, intersecting with the original demand curve at a higher quantity of labor and lower wage rate.

The new equilibrium wage is slightly lower at $9.50 since the increase in supply has put downward pressure on wages. The new equilibrium quantity of labor is 610,000, which represents the increase in supply plus the original quantity supplied at the old equilibrium wage.

Therefore, the best choice is C, W=$9.50;Q=610,000.

Question 6

Which of the following is not a consequence of minimum wage laws?

Accepted Answer

All the other options are consequences of minimum wage laws. Option C is not a consequence as it is a strategy that producers may use to compensate for the increased labor cost due to minimum wage laws.

Question 7

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.Suppose that the quantity of labor supplied decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 8

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.What is the equilibrium hourly wage (W*)and the equilibrium quantity of labor (Q*)?

Accepted Answer

The equilibrium hourly wage (W*) is where the quantity demanded equals the quantity supplied. In this case, the intersection point of the demand and supply curves is at a wage of $10.50 and a quantity of 590,000, so W* = $10.50 and Q* = 590,000.

Question 9

What is deadweight loss? When is deadweight loss equal to zero?

Accepted Answer

The answer of What is deadweight loss? When is deadweight...

Question 10

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.Suppose that the quantity of labor demanded decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 11

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.If a minimum wage of $12.50 is mandated there will be a

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 12

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.Suppose that the quantity of labor demanded increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

To find the new equilibrium, we need to add 40,000 to the quantity of labor demanded at each wage level. The new demand schedule is:

| Wage   | Quantity Demanded | 
|--------|-------------------|
| $8.50  | 440,000 + 40,000  | 
| $9.00  | 400,000 + 40,000  | 
| $9.50  | 360,000 + 40,000  |
| $10.00 | 320,000 + 40,000  |
| $10.50 | 280,000 + 40,000  |
| $11.00 | 240,000 + 40,000  |
| $11.50 | 200,000 + 40,000  |
| $12.00 | 160,000 + 40,000  |
| $12.50 | 120,000 + 40,000  |
| $13.00 | 80,000 + 40,000   |
| $13.50 | 40,000 + 40,000   |

The new supply schedule remains the same:

| Wage   | Quantity Supplied | 
|--------|------------------|
| $8.50  | 400,000          | 
| $9.00  | 360,000          | 
| $9.50  | 320,000          |
| $10.00 | 280,000          |
| $10.50 | 240,000          |
| $11.00 | 200,000          |
| $11.50 | 160,000          |
| $12.00 | 120,000          |
| $12.50 | 80,000           |
| $13.00 | 40,000           |
| $13.50 | 0                |

The new equilibrium occurs at a wage of $11.50 and a quantity of labor of 610,000 (the point where the new demand and supply schedules intersect). Therefore, the answer is D.

Question 13

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.If a minimum wage of $11.50 an hour is mandated,what is the quantity of labor demanded?

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 14

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.If a minimum wage of $12.50 an hour is mandated,what is the quantity of labor demanded?

Accepted Answer

When a minimum wage of $12.50 an hour is mandated, the quantity of labor demanded decreases from 700,000 to 550,000. This is because at the higher wage rate, firms are willing to hire fewer workers.

Question 15

When a competitive equilibrium is achieved in a market

Accepted Answer

A competitive equilibrium is achieved when the market demand equals market supply, resulting in the most efficient allocation of resources and maximization of total net benefit to society. This means that both consumers and producers are able to benefit from the transaction, and there is no deadweight loss as would occur with a price ceiling or floor.

Question 16

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.If a minimum wage of $11.50 an hour is mandated,what is the quantity of labor supplied?

Accepted Answer

Looking at the supply schedule, we can see that at a wage of $11.50, 610,000 workers are willing to supply their labor. Therefore, the answer is C.

Question 17

The graph below represents the market for alfalfa.The market price is $7.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and economic surplus.

Accepted Answer

The answer of The graph below represents the market for...

Question 18

What is meant by the term "economic efficiency"?

Accepted Answer

The answer of What is meant by the term "economic...

Question 19

The graph below represents the market for alfalfa.The equilibrium price is $7.00 per bushel,but the market price is $9.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $9.00.

Accepted Answer

The answer of The graph below represents the market for...

Question 20

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.If a minimum wage of $12.50 an hour is mandated,what is the quantity of labor supplied?

Accepted Answer

At a wage of $12.50, the quantity of labor supplied is 630,000, which is the intersection of the supply curve and the minimum wage line. This can be found by locating $12.50 on the x-axis and then tracing up to the supply curve. Choosing A, B, or D would be incorrect as they do not correspond to the quantity supplied at a minimum wage of $12.50.

Quiz 4: Economic Efficiency, government Price Setting, and Taxes

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Rent control is an example of

Which of the following is not a consequence of minimum wage laws?

What is deadweight loss? When is deadweight loss equal to zero?

When a competitive equilibrium is achieved in a market

The graph below represents the market for alfalfa.The market price is $7.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and economic surplus.

What is meant by the term "economic efficiency"?

The graph below represents the market for alfalfa.The equilibrium price is $7.00 per bushel,but the market price is $9.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $9.00.