Econ Chapter 4

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.

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.

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 factors can cause a shift in labor supply? Select all that apply.

1) Required education 2) Number of workers

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.

?

What will happen if the supply curve for financial markets moves to the left?

Interest rates will go up.

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

What type of price control is enacted in an attempt to keep prices low for those who demand the product?

Price ceiling

What will happen when consumers and businesses have greater confidence that they will be able to repay debt in the future?

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

What will happen if construction companies offer higher wages or other incentives to attract qualified trades workers from other states?

The supply curve will shift to the right.

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

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

both the equilibrium price and quantity will rise.

Improvements in the productivity of labor will tend to:

increase wages.

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

increases; fall

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

the quantity supplied at that price.

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

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

equilibrium quantity decreases from 15 to 13.?

A straightforward example of a _______________, often used for simplicity, is the interest rate.

rate of return

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

technology

Which would not lead to an increase in prices of corn in the United States?

A record corn crop in corn-producing states

If the community colleges in the affected states all receive grants to train local residents in construction trades, what will happen to wages once the colleges begin graduating qualified trades workers?

Wages will go down.

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.

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

Which factors can shift the supply of financial capital to a certain investment? Select all that apply.

1) If the riskiness or return on one investment changes relative to other investments 2) If people want to alter their existing levels of consumption

The peanut crop in the peanut-producing region of the United States has been infected with a fungus, requiring that most of the crop be destroyed. Which conclusions are true?

1) The price of peanut butter will increase. 2)The price of hazelnuts (Nutella) will increase.

The U.S. government just issued a 1-year ban on the fishing or capture of wild oysters in the United States. Which conclusions are true?

1) The price of wild oysters will increase. 2) The price of mussels will increase.