Chapter 4: Labor and Financial Markets

In 2010, Americans had about _________ outstanding in credit card debts not paid on time.

$900 billion

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.

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.

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

12% to 18%

Refer to the figure. The movement from ____________ to ______________ is consistent with a successful advertising campaign that claims wool keeps you warm.

Point A; Point F

Refer to the figure. 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.

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

a shortage

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

an increase in labor productivity

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

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

rate of return

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

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

the quantity demanded at that price.

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

the quantity supplied at that price.

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

Are markets always in equilibrium?

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