Macroeconomics 4.3 Studyguide
20) A black market is a market where buying and selling take place A) at prices that violate government price regulations. B) in non-licensed shops and warehouses. C) after regular office hours. D) on foreign soil.
A
47) If the government implements a price ceiling on insulin, this will have all of the following effects on the market for insulin except A) an increase in consumer surplus. B) an increase in producer surplus. C) an increase in deadweight loss. D) a more efficient equilibrium.
D
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 11) Refer to Table 4-4.ȱȱIf a minimum wage of $10.50 is mandated there will be a A) shortage of 30,000 units of labor. B) surplus of 30,000 units of labor. C) shortage of 60,000 units of labor. D) surplus of 60,000 units of labor.
D
51) Rent control is an example of a price floor.
FALSE
31) Which term refers to a legally established maximum price that firms may charge? A) a price ceiling B) a subsidy C) a price floor D) a tariff
A
32) In order to be binding a price floor A) must lie above the free market equilibrium price. B) must lie below the free market equilibrium price. C) must coincide with the free market equilibrium price. D) must be high enough for firms to earn a profit.
A
43) In cities with rent controls, the actual rents paid can be ________ than the legal maximum.ȱȱOne explanation for this is because there is a ________ of apartments, tenants are ________. A) higher; shortage; often willing to pay rents higher than the law allows B) higher; surplus; often forced to pay rents higher than the law allows C) lower; surplus; never willing to pay rents below the legal maximum D) lower; shortage; rarely willing to pay rents lower than the law allows
A
44) Which of the following is a result of government price controls? A) Some people win and some people lose. B) Price controls benefit poor consumers but harm producers and wealthy consumers. C) Price controls increase economic efficiency. D) The deadweight loss from price ceilings is greater than the deadweight loss from price floors.
A
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 10) Refer to Table 4-4. If a minimum wage of $10.50 an hour is mandated, what is the quantity of labor supplied? A) 400,000 B) 370,000 C) 340,000 D) 60,000
A
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 12) Refer to Table 4-4. Suppose that the quantity of labor demanded increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? A) W = $10.00; Q = 390,000 B) W = $9.50; Q = 380,000 C) W = $8.50; Q = 380,000 D) W = $8.00; Q = 390,000
A
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 2) Refer to Table 4-4. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? A) W* = $9.00; Q* = 370,000 B) W* = $8.50; Q* = 380,000 C) W* = $8.50; Q* = 360,000 D) W* = $9.00; Q* = 740,000
A
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 7) Refer to Table 4-4. If a minimum wage of $10.00 an hour is mandated, what is the quantity of labor supplied? A) 390,000 B) 370,000 C) 350,000 D) 40,000
A
York City Mayor Michael Bloomberg proposed a bill which would set a $10.50 minimum price for a pack of cigarettes. The bill would also prohibit retailers from offering any discounts such as 2-for-1 offers or accepting discount coupons. New York City already has the highest cigarette tax in the country, at $5.85 per pack, and the state of New York is one of many which already require cigarettes be marked up by a specified percentage. This bill is a companion to one which would require stores to keep tobacco products hidden from sight. Although the bills are expected to be challenged in court, a precedent has been set in Rhode Island, where a court upheld a ruling allowing the city of Providence to forbid retailers from accepting coupons and offering discounts on cigarettes. Source: Vivian Yee,ȱȈBloomberg Seeks End to Cheap Cigarettes,Ȉȱ New York Times, March 26, 2013. 48) Refer to the Article Summary. The minimum price of $10.50 per pack of cigarettes being proposed by mayor Bloomberg would have which of the following effects on the market for cigarettes? A) Consumer surplus will decrease. B) Some producer surplus will be transferred to consumers. C) Deadweight loss will decrease. D) Marginal benefit will be less than marginal cost.
A
1) When ________ in a market, the total net benefit to society is maximized. A) deadweight loss is maximized B) a competitive equilibrium is achieved C) consumer surplus is minimized D) producer surplus is minimized
B
16) Which of the following is a consequence of minimum wage laws? A) Low skilled workers benefit because minimum wage increases the number of jobs providing low skilled workers with training. B) Employers will be reluctant to offer low-skill workers jobs with training. C) Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. D) All workers benefit when the minimum wage is increased.
B
17) The minimum wage is an example of A) a subsidy for low-skilled workers. B) a price floor. C) a price ceiling. D) a black market.
B
33) ________ dictates the lowest wage that firms may pay for labor. A) A maximum wage requirement B) A minimum wage law C) The black market wage D) A price ceiling wage
B
39) Because minimum wage is a price floor A) it will be set below the market equilibrium price. B) it will create a deadweight loss. C) it will increase the number of jobs available in the labor market. D) it will maximize consumer surplus.
B
42) Which of the following describes the difference betweenȱȈscarcityȈȱandȱȈshortageȈ? A) There is no difference; either word can be used to describe the situation that exists when there is less of a good or service available than people want. B) In the economic sense, almost everything is scarce.ȱȱA shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price. C) There is a shortage of almost everything.ȱȱScarcity occurs only if the quantity demanded of a good or service is greater than the quantity supplied at the current market price. D) In the economic sense, almost everything is scarce.ȱȱA shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the equilibrium price.
B
45) Economists ________ that price controls are desirable. A) are in agreement B) are reluctant to state C) never believe D) only recently agree
B
46) If the government implements a price ceiling on insulin, this will A) increase the price consumers will pay for insulin. B) decrease the quantity of insulin the manufacturers will be willing to supply. C) have to be set above the market equilibrium price to be effective. D) encourage manufacturers to produce and sell more of insulin to increase their profits.
B
49) Companies in the sharing economy, such as Airbnb and Uber, have the potential to increase consumer surplus and decrease deadweight loss. This would occur by ________ the equilibrium price in their market, and by doing so ________ efficiency. A) lowering; decreasing B) lowering; increasing C) raising; decreasing D) raising; increasing
B
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 4) Refer to Table 4-4. If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor supplied? A) 390,000 B) 380,000 C) 370,000 D) 340,000
B
19) Government intervention in agricultural markets in the U.S. began A) during World War II to ensure that enough food was available for domestic consumption. B) after World War I in order to assist farmers to adjust from a war-time economy to a peace-time economy. C) during the Great Depression. D) during the Korean War.
C
41) Which of the follow is a result of imposing a rent ceiling? A) Some consumer surplus is converted to producer surplus. B) There is an increase in the quantity of apartments supplied. C) There is an increase in the quantity of apartments demanded. D) The marginal benefit of the last apartment rented is less than the marginal cost of supplying it.
C
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 15) Refer to Table 4-4. Suppose that the quantity of labor supplied decreases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? A) W = $9.00; Q = 330,000 B) W = $9.50; Q = 370,000 C) W = $10.00; Q = 350,000 D) W = $8.00; Q = 390,000
C
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 3) Refer to Table 4-4. If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor demanded? A) 380,000 B) 370,000 C) 360,000 D) 10,000
C
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 6) Refer to Table 4-4. If a minimum wage of $10.00 an hour is mandated, what is the quantity of labor demanded? A) 390,000 B) 370,000 C) 350,000 D) 40,000
C
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 9) Refer to Table 4-4. If a minimum wage of $10.50 an hour is mandated, what is the quantity of labor demanded? A) 400,000 B) 370,000 C) 340,000 D) 60,000
C
18) To affect the market outcome, a price floor A) must be set above the black market price. B) must be set above the legal price. C) must be set above the price ceiling. D) must be set above the equilibrium price.
D
38) Congress passed the Freedom to Farm Act in 1996.ȱȱWhat was the purpose of this Act? A) to encourage more people to become farmers B) to grant free land to farmers in order to produce crops that were particularly scarce C) to phase out the use of price ceilings in agricultural markets D) to phase out price floors and return to a free market in agriculture
D
40) Increases in the minimum wage are intended to raise the incomes of low-income workers. Many economists favor a different policy to achieve this goal, a policy that avoids the deadweight losses that result from the minimum wage.ȱȱWhat is this policy? A) distribution of food stamps to low-income consumers B) distribution of vouchers that can be used for rent or mortgage payments C) the Alternative Minimum Tax D) the earned income tax credit
D
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 13) Refer to Table 4-4. Suppose that the quantity of labor demanded decreases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? A) W = $10.00; Q = 390,000 B) W = $9.50; Q = 380,000 C) W = $8.50; Q = 340,000 D) W = $8.00; Q = 350,000
D
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 14) Refer to Table 4-4. Suppose that the quantity of labor supplied increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor? A) W = $9.00; Q = 410,000 B) W = $9.50; Q = 420,000 C) W = $8.50; Q = 400,000 D) W = $8.00; Q = 390,000
D
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 5) Refer to Table 4-4.ȱȱIf a minimum wage of $9.50 is mandated there will be a A) shortage of 10,000 units of labor. B) surplus of 10,000 units of labor. C) shortage of 20,000 units of labor. D) surplus of 20,000 units of labor.
D
Hourly Wage (dollars) Quantity of labor supplied quantity of labor demanded 8 350000 390000 8.5 360000 380000 9 370000 370000 9.5 380000 360000 10 390000 350000 10.5 400000 340000 8) Refer to Table 4-4.ȱȱIf a minimum wage of $10.00 is mandated there will be a A) shortage of 20,000 units of labor. B) surplus of 20,000 units of labor. C) shortage of 40,000 units of labor. D) surplus of 40,000 units of labor.
D
50) Government intervention in agriculture began in the United States in the 1890s.
FALSE
52) Price floors are illegal in the United States.
FALSE
53) Price ceilings result in shortages.
FALSE
54) All renters benefit from rent control and all landlords lose.
FALSE
55) There is a shortage of every good that is scarce.
FALSE