ECON ch 7
Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour. If the wage rate that Lauren earns is $7 per hour, then the orchard owner's surplus from Lauren's labor is ________ per hour.
$1
Which of the following describes a difference between a price support and a price ceiling?
A price support attempts to raise the price above the equilibrium price while a price ceiling does not.
Which of the following is an example of the unfairness of rent control?
Correct Newcomers have a more difficult time finding apartments.
Which of the following is an impact of a rent ceiling set below the equilibrium rent?
Landlords' incentives to provide apartments decrease.
Is the minimum wage fair?
No, because workers who lose their jobs are made worse off.
In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $5 per ton,
None of these answers is correct.
One result of the minimum wage is
a black market for labor that pays less than the minimum wage.
A price floor in an agricultural market is called
a price support.
Suppose the equilibrium rent in Denver is $1,050. A rent ceiling of $755 per month leads to
a shortage of apartments in Denver.
A rent ceiling on housing creates a problem of allocating the available housing units because
a shortage of apartments occurs.
An increase in the minimum wage to $15 per hour would lead to
an increase in search activity for many workers.
Labor unions support increases in the minimum wage because
an increase in the minimum wage increases the demand for union labor.
The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage
benefits only those workers who are able to find and keep a job.
An illegal market in which the price exceeds a legally imposed price ceiling is called a
black market.
To keep the price at the level set by a price support, the government must
buy some of the good.
In a competitive labor market, a minimum wage law set above the equilibrium wage rate
creates a surplus of labor.
If a rent ceiling is set below the equilibrium price, thus creating a shortage,
housing may be allocated by increasing search activity or creating a black market.
A rent ceiling creates a deadweight loss
if it is set below the equilibrium rent.
In the labor market, as wages rise, households
increase the quantity of labor supplied.
A minimum wage set above the equilibrium wage rate
increases the quantity of labor services supplied.
Labor unions support the minimum wage because
it puts upward pressure on all wages.
If a minimum wage is introduced that is above the equilibrium wage rate,
job search activity increases.
If the government imposes an effective price support,
output decreases and total revenue increases.
When a price support is set below the equilibrium price,
producers do not change the quantity supplied, and consumers do not change the quantity demanded.
The shortage created by a price ceiling will likely be
smaller if the good is a necessity.
When a minimum wage is inefficient,
the firms' surplus and workers' surplus shrink, a deadweight loss arises, and resources are lost in job search.
If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search,
the firms' surplus decreases and the workers' surplus decreases.
When a price ceiling is set below the equilibrium price,
the quantity supplied is less than the quantity demanded and a surplus exists.
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 quantity supplied of milk exceeds the quantity demanded.
The people who immediately benefit from a minimum wage are
the workers who retain their jobs after enactment of the minimum wage.
