Question 1

A legally mandated minimum wage is an example of

Accepted Answer

A legally mandated minimum wage sets a minimum wage that employers must pay their employees, so it acts as a price floor. It prevents employers from paying wages that are below the set minimum wage, and this can lead to an increase in unemployment if employers are not willing to pay the higher wage. The other options are not relevant to the concept of minimum wage.

Question 2

Suppose the market equilibrium price of wheat is $5 per bushel, and the government sets a price floor of $7 per bushel to aid growers. What is the most likely result of this action?

Accepted Answer

The price floor of $7 is above the market equilibrium price of $5, which means that the price is artificially inflated. This will lead to an increase in the quantity supplied of wheat as producers try to take advantage of the higher price. At the same time, the higher price will discourage some buyers, leading to a decrease in the quantity demanded. The result is a surplus of wheat, as there is more wheat supplied than there is demanded at the higher price.

Question 3

Which one of the following will most likely be harmed by legislation exempting teenagers from the minimum wage?

Accepted Answer

The answer of Which one of the following will most...

Question 4

The large amount of violence associated with the current drug trade is mostly caused by

Accepted Answer

The fact that drug markets must operate outside the normal legal system creates an environment in which violence can thrive. Without legal systems to enforce contracts and settle disputes, violence becomes a common means of resolving conflicts and protecting oneself or one's business interests.

Question 5

Which of the following is true?

Accepted Answer

According to research, most minimum wage workers are employed part-time and are often members of households with an income well above the poverty level. This is because many minimum wage jobs are second jobs or held by teenagers and students.

Question 6

Which of the following statements is true?

Accepted Answer

Both black markets and legal markets are subject to the laws of supply and demand, which determine the price of goods and services. However, black markets may have different price levels due to factors such as scarcity or risk of detection. The other statements are false.

Question 7

A market that operates outside the legal system, either by selling illegal goods or by selling goods at illegal prices is referred to in economics as a

Accepted Answer

A black market is a market that operates outside the legal system by selling illegal goods or by selling goods at illegal prices. A gray market is a market where goods are sold legally, but through unauthorized or unintended channels, often at a cheaper price. Resource markets refer to the exchange of resources such as labor, land, and capital. Criminal market is not a commonly used term in economics.

Question 8

A price floor set above an equilibrium price tends to cause persistent imbalances in the market because

Accepted Answer

The answer of A price floor set above an equilibrium...

Question 9

Both price floors and price ceilings lead to

Accepted Answer

The answer of Both price floors and price ceilings lead...

Question 10

If a government-imposed price floor legally sets the price of milk above market equilibrium, which of the following will most likely happen?

Accepted Answer

A price floor above market equilibrium will result in a surplus of milk, as producers will be incentivized to produce more milk due to the higher price, while consumers will be discouraged from purchasing as much due to the higher cost. This will lead to excess supply that cannot be sold at the higher price, resulting in a surplus. The other options are not likely outcomes because an increase in demand or a decrease in supply would require a shift in the demand or supply curves, which is not necessarily inherent in the given scenario. A shortage of milk would only occur if there was a price ceiling below market equilibrium.

Question 11

In a market economy, which of the following would most likely cause a prolonged grain surplus?

Accepted Answer

The answer of In a market economy, which of the...

Question 12

If drugs such as marijuana and cocaine were legalized, it would be likely that

Accepted Answer

Legalizing marijuana and cocaine would likely lead to a decrease in prices, as the increased competition and decreased risk for sellers would drive down costs. Legalization would also lead to increased regulation and quality control, reducing the likelihood of tainted or poor quality drugs. Furthermore, legalizing these drugs would eliminate the need for black market drug transactions, which are often associated with violence. Therefore, all of the above are likely outcomes of drug legalization.

Question 13

If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?

Accepted Answer

When the minimum wage is set above the market equilibrium, there will be an excess supply of unskilled labor, or unemployment. This is because employers will not be willing to hire as many workers at the higher wage, while more workers will be willing to supply their labor at that wage. Thus, there will be a surplus of unskilled labor in the market.

Question 14

Which of the following will most likely occur when government price controls fix the price of a good above market equilibrium?

Accepted Answer

When government price controls fix the price of a good above market equilibrium, the quantity of the good supplied will increase while the quantity demanded will decrease, creating a surplus. This means that there will be excess supply, as producers will want to sell their goods at the higher price, while consumers will not want to buy as much of the good at the higher price. Waiting lines and deteriorating quality are more likely to occur when the price is fixed below the market equilibrium. Consumers will buy less of the good than they would at the market equilibrium price.

Question 15

Economic analysis indicates minimum wage legislation has

Accepted Answer

Economic analysis suggests that minimum wage legislation reduces on-the-job training opportunities available, particularly for teenagers who are just starting in the job market. This is because employers may be less willing to take a chance on someone with little experience if they have to pay them a higher wage.

Question 16

A politician was recently quoted as saying, "Our country can only reach full employment by raising the minimum wage, which would cause the demand for products to increase . . . and eventually cause production to expand." His analysis overlooks the fact that

Accepted Answer

The politician's analysis overlooks the fact that minimum wage legislation increases costs of production, which leads to higher product prices and a reduced demand for products. This can result in an excess supply of unskilled labor, leading to increased unemployment rather than full employment. The impact on skilled workers is not mentioned in the quote and is therefore not relevant to the analysis. The role of automation in unemployment is also not addressed. Therefore, A is the best choice.

Question 17

When a price floor is imposed above the equilibrium price of a commodity,

Accepted Answer

The answer of When a price floor is imposed above...

Question 18

Which of the following statements is true?

Accepted Answer

The answer of Which of the following statements is true?
...

Question 19

Which of the following is true?

Accepted Answer

The answer of Which of the following is true?
...

Question 20

Exempting teenagers from the minimum wage would probably cause

Accepted Answer

The answer of Exempting teenagers from the minimum wage would...

Quiz 4: A : Supply and Demand: Applications and Extensions

A legally mandated minimum wage is an example of

Suppose the market equilibrium price of wheat is $5 per bushel, and the government sets a price floor of $7 per bushel to aid growers. What is the most likely result of this action?

Which one of the following will most likely be harmed by legislation exempting teenagers from the minimum wage?

The large amount of violence associated with the current drug trade is mostly caused by

Which of the following is true?

Which of the following statements is true?

A market that operates outside the legal system, either by selling illegal goods or by selling goods at illegal prices is referred to in economics as a

A price floor set above an equilibrium price tends to cause persistent imbalances in the market because

Both price floors and price ceilings lead to

If a government-imposed price floor legally sets the price of milk above market equilibrium, which of the following will most likely happen?

In a market economy, which of the following would most likely cause a prolonged grain surplus?

If drugs such as marijuana and cocaine were legalized, it would be likely that

If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?

Which of the following will most likely occur when government price controls fix the price of a good above market equilibrium?

Economic analysis indicates minimum wage legislation has

A politician was recently quoted as saying, "Our country can only reach full employment by raising the minimum wage, which would cause the demand for products to increase . . . and eventually cause production to expand." His analysis overlooks the fact that

When a price floor is imposed above the equilibrium price of a commodity,

Which of the following statements is true?

Which of the following is true?

Exempting teenagers from the minimum wage would probably cause