ECON CH.4 Homework

Refer to Table 4-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively.

$4; 16

The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product.

demand; right

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.

increases; fall

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.

will increase

In the United States, a typical credit card interest rate ranges from ______________ per year.

12% to 18%

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be?

Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

Refer to Figure 4-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm.

Point A; Point F

Refer to Figure 4-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute).

Point A; Point H

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.

Refer to Table 4-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then:

a 10 unit shortage will result.

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to:

a sharp increase in the demand for and construction of wood-frame homes.

The imposition of a price ceiling on a market often results in:

a shortage

Which of the following results in a rightward shift of the market demand curve for labor?

an increase in demand for the firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor?

an increase in the wage rate

Refer to Table 4-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then:

equilibrium price increases from $6 to $8

Improvements in the productivity of labor will tend to:

increase wages.

Other things being equal, a __________ supply of workers tends to __________ real wages.

larger; decrease

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s.

living wage law

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.

new technologies

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

technology

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.

technology

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

the quantity demanded at that price.

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

the quantity demanded of financial capital at any given interest rate will shift to the right.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

the quantity supplied at that price.

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.

usury laws

Are markets always in equilibrium?

No, but if there is no outside interference, they tend to move toward equilibrium.

The "law of supply" functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.

price