Question 1

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

Accepted Answer

A minimum wage law set above the equilibrium wage rate creates a surplus of labor, as more workers are willing to work at the higher wage rate, but fewer employers are willing to pay that rate, leading to an excess supply of labor. This can result in higher unemployment and a reduction in overall economic efficiency.

Question 2

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 3

A price floor set above the equilibrium price

Accepted Answer

When a price floor is set above the equilibrium price, it means that the legal minimum price is higher than the price at which the quantity demanded and supplied are equal. This creates an excess supply or surplus because suppliers are willing to supply more at the higher price, but less is demanded by consumers at the higher price. Therefore, the quantity supplied exceeds the quantity demanded, leading to a surplus.

Question 4

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 employers. This may cause them to either reduce the quantity of labor they demand or substitute technology for labor, which would result in job losses. Employers could also raise the price of their products to offset the increased labor costs, but this may decrease the demand for their products, resulting in lower revenue and potentially job losses as well. Therefore, choice B, which states that the increase in the minimum wage decreases the quantity of labor demanded, is the best choice.

Question 5

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 6

Which of the following is an example of a price floor?

Accepted Answer

A minimum wage law sets a price floor for the wages that employers must pay their workers.

Question 7

A price floor makes prices

Accepted Answer

A price floor sets a minimum price for a good or service, making it illegal to trade the good or service at a price below the floor.

Question 8

A price floor

Accepted Answer

A price floor is a minimum price set by the government or seller above the equilibrium price. If the price floor is set above the equilibrium price, it creates a surplus of supply, as producers are willing to supply more goods or services at the higher price but fewer consumers are willing to purchase them. This excess supply leads to a decrease in demand, resulting in a decrease in the quantity demanded of the said goods or services. Therefore, a price floor changes the price and quantity if it is set above the equilibrium price.

Question 9

-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 10

In the labor market,as wages rise,households

Accepted Answer

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

Question 11

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

If the minimum wage is higher than the equilibrium wage rate, the cost of labor for firms increases, and they will be less willing to hire as many workers as before. As a result, the quantity of apricot pickers employed decreases. In this case, the minimum wage is $0.50 higher than the equilibrium wage rate, which means that some firms may choose to hire fewer workers or replace them with machines, resulting in a decrease in the number of apricot pickers employed.

Question 12

Rent ceilings

Accepted Answer

Rent ceilings benefit renters living in rent-controlled apartments by limiting the amount of rent they have to pay, making housing more affordable for low-income individuals. However, rent ceilings can have negative effects on the overall housing market, including reducing the quantity and quality of available housing as landlords have less incentive to invest in or maintain properties, and potentially leading to long waiting lists for rent-controlled units.

Question 13

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 minimum wage is already below the equilibrium wage rate, there is no immediate impact on the market for housekeepers. The minimum wage increase to $7.50 per hour would have no effect on the equilibrium wage rate, and therefore no effect on the quantity of housekeepers supplied or demanded. There would be no surplus, shortage, or unemployment of housekeepers resulting from this minimum wage increase.

Question 14

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

Since the minimum wage is set below the equilibrium wage rate, it will not have an effect on the quantity of apricot pickers employed. The market will still clear at the equilibrium level of 14,000 workers. Therefore, the quantity of apricot pickers employed does not change.

Question 15

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 16

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. This is achieved by setting a minimum wage level that employers must pay to their employees, ensuring that they earn a certain amount for their work. The intent is to reduce poverty and provide a minimum standard of living for workers.

Question 17

A price floor is

Accepted Answer

A price floor is the lowest legal price at which a good or service can be traded. It is usually imposed by the government to prevent prices from falling too low and harming producers. This results in a surplus of the good or service because the quantity supplied is higher than the quantity demanded at the price floor.

Question 18

A rent ceiling is

Accepted Answer

Rent ceilings are generally considered unfair because they distort the market and create shortages. Landlords may be forced to decrease the quality of their properties or stop investing in maintenance, since they cannot charge higher rents to offset those costs. As a result, renters may end up with fewer and lower-quality housing options. Additionally, rent ceilings can lead to discrimination against certain tenants, as landlords may prefer to rent to those who offer higher compensation under the table. Therefore, rent ceilings do not benefit all renters equally and can have negative consequences for both landlords and tenants.

Question 19

A minimum wage increases unemployment by

Accepted Answer

When the minimum wage increases, firms are forced to pay their workers a higher wage, which in turn increases the cost of production. As a result, firms may choose to hire fewer workers or replace them with automation. This leads to a decrease in the quantity of labor demanded, which can result in unemployment.

Question 20

-The graph shows the market for rental housing in Little Rock.The market for apartments is efficient when

Accepted Answer

An efficient market occurs when supply and demand are in equilibrium without any external interventions, such as rent ceilings, which can create shortages or surpluses.

Quiz 7: Government Actions in Markets