Ch 5

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.

How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known?

-They increase the quantity of apples supplied.

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

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

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

-new technologies

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

-price ceilings

A change in the quantity of the product that the labor produces can:

-shift the demand curve for labor

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

-shift to the right, decreasing the price of the drug

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

-technology

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

-the quantity supplied at that price.

Laws that impose an upper limit on the interest rate that lenders can charge are known as:

-usury laws

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

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

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

-Increases; fall

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

A price floor that makes it illegal for an employer to pay employees less than a certain hourly rate is known as:

-minimum wage

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

-rate of return