Question 1

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 2

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?
A) In regions with the highest minimum wage, most of the jobs require low skills and workers are not productive enough to get paid the higher wage.
B) In regions with the lowest minimum wage, most of the jobs require technical skills and no one works minimum wage jobs.
C) In regions with the lowest minimum wage, the price control is non-binding; in the regions with the highest minimum wage, the price control is binding.
D) In regions with the lowest minimum wage, the price control is binding; in the regions with the highest minimum wage, the price control is non-binding.
E) In regions with the highest minimum wage, the minimum wage law is legally enforced; in regions with the lowest minimum wage, the law is not strongly enforced.

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 3

How would an economist explain a teenager's continued unemployment where there exists a minimum wage?
A) The minimum wage law made it such that the quantity of labor willing to work at that wage was less than the quantity of labor demanded at that wage.
B) The minimum wage law made it illegal to hire teenagers because they likely would have been unable to work a minimum number of hours.
C) The minimum wage law made it such that the quantity of labor willing to work at that wage was greater than the quantity of labor demanded at that wage.
D) The minimum wage law made it such that the market had reached equilibrium.
E) The minimum wage law was non-binding.

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 4

Which of the following is a correct statement about a minimum wage law?
A) It reduces costs for employers.
B) It ensures that all who want a job can get a job with a high enough wage.
C) It causes prices to rise as producers pay more for labor.
D) It is a price ceiling law that makes wages higher than the market equilibrium price.
E) It is a price floor law that forces wages to be lower than the market equilibrium price.

Accepted Answer

A minimum wage law requires employers to pay a certain minimum amount to their workers, which increases the cost of labor. In order to offset this increased cost, producers may need to increase the prices of their goods or services, leading to higher prices for consumers.

Question 5

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 6

Use the following table to answer the questions that follow.
 
-If a minimum wage is established at $7.50,what would be the amount of disequilibrium in the labor market?
A) There would be a shortage of labor of 20,170,000.
B) There would be a surplus of labor of 20,170,000.
C) There would be neither a shortage nor a surplus.
D) A labor shortage of 20,170,000 would be eliminated because individuals would decide to work in the illegal black market.
E) A labor shortage of 20,170,000 would increase as individuals find work in the illegal black market.

Accepted Answer

According to the table, the quantity of labor supplied at a wage of $7.50 is 90 million, while the quantity of labor demanded is only 69.83 million. This means there would be a surplus of labor of 20.17 million, which is the amount of disequilibrium in the market. Option B is the only choice that reflects this information.

Question 7

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 8

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 9

Let's say that you are a politician who promises cheaper gasoline for everyone in the country if you are elected.Once you are elected,you make 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 your price ceiling law? Would you expect to be reelected in the long run?

Accepted Answer

The answer of Let's say that you are a politician...

Question 10

If a price ceiling or price floor existed where you lived,would you be willing to purchase products on the black market? If alternative products were available,what would you 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 11

Why is raising the minimum wage generally ineffective?
A) Most employers purchase labor on the black market, where the binding price floor is not present.
B) The minimum wage is an amount suggested by the government, and employers are under no obligation to pay their employees the suggested basic wage.
C) The minimum wage is usually set below the prevailing equilibrium wage and is frequently non-binding.
D) Employees are often unconcerned with their wages and care more about the benefits that come with the job.
E) Most employees who hold low-wage jobs work in the black market, where the binding price floor does not exist.

Accepted Answer

The minimum wage is often set below the prevailing equilibrium wage, which means that it is frequently non-binding. This means that employers may already be paying their employees at a rate higher than the minimum wage, making the increase in minimum wage ineffective. Additionally, some employers may respond to an increase in minimum wage by reducing worker hours or scaling back hiring, which can have negative effects on employment rates.

Question 12

Use the following table to answer the questions that follow.
 
-If a minimum wage is set at $5.50,what would be the amount of disequilibrium in the labor market?
A) There would be a labor shortage of 25,515,000.
B) There would be a labor surplus of 25,515,000.
C) There would be neither a shortage nor a surplus.
D) A labor surplus of 25,515,000 would be eliminated because individuals would decide to work in the illegal black market.
E) A labor surplus of 25,515,000 would increase as individuals find work in the illegal black market.

Accepted Answer

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

Question 13

Use the following table to answer the questions that follow.
 
-At what price level does the labor market experience its largest surplus?
A) $5.00
B) $5.50
C) $6.00
D) $7.50
E) $8.00

Accepted Answer

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

Question 14

Who potentially benefits from a price floor?
A) workers
B) employers
C) no one
D) renters
E) consumers

Accepted Answer

A price floor benefits workers by ensuring that they receive a minimum wage, which can improve their standard of living and provide more stability in the labor market.

Question 15

Use the following table to answer the questions that follow.
 
-At what price level does the labor market experience its largest shortage?
A) $5.00
B) $5.50
C) $6.00
D) $7.50
E) $8.00

Accepted Answer

At the lowest price level, $5.00, the labor market experiences its largest shortage because the quantity of labor demanded exceeds the quantity of labor supplied, creating the largest gap between demand and supply.

Question 16

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 17

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 18

Use the following table to answer the questions that follow.
 
-At what price level does the labor market reach equilibrium?
A) $5.00
B) $5.50
C) $6.00
D) $6.50
E) $7.00

Accepted Answer

At $6.00 the quantity of labor supplied (12) equals the quantity of labor demanded (12), indicating an equilibrium in the labor market. At a price level below $6.00, the quantity of labor demanded exceeds the quantity of labor supplied, which leads to a shortage of labor. As a result, firms will increase wages and workers will be willing to supply more labor, eventually leading to an equilibrium at $6.00.

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:
A) remain below the equilibrium wage and be binding.
B) remain above the equilibrium wage and be binding.
C) remain below the equilibrium wage and be non-binding.
D) remain above the equilibrium wage and be non-binding.
E) be equal to the equilibrium wage.

Accepted Answer

The answer of As a politician,you would be more inclined...

Question 20

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...

Quiz 4: Market Efficiency

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?

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?

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

Which of the following is a correct statement about a minimum wage law?

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?

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

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?

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?

If a price ceiling or price floor existed where you lived,would you be willing to purchase products on the black market? If alternative products were available,what would you identify as a consequence to engaging in transactions on the black market over the short run and the long run?

Why is raising the minimum wage generally ineffective?

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

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

Who potentially benefits from a price floor?

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

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.

Use the following table to answer the questions that follow. -At what price level does the labor market reach equilibrium?

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:

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