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31
Copyright © 2011 Pearson Education, Inc.
73) The graph shows the market for rental housing in Little Rock. The market for apartments is
efficient when ________.
A) the quantity of apartments demanded is 12,000 a month
B) the rent ceiling is set at $300 a month
C) there is no rent ceiling
D) the quantity of apartments supplied is 6,000 a month
E) the rent charged is less than $450
Skill: Level 3: Using models
Section: Checkpoint 7.1
Author: MyEconLab Web Site
AACSB: Analytical reasoning
74) Rent ceilings
A) eliminate the problem of scarcity.
B) allocate resources efficiently.
C) ensure that housing goes to the poorer people.
D) benefit renters living in rent-controlled apartments.
E) benefit all landlords because the landlords know what rent to charge their renters.
Skill: Level 2: Using definitions
Section: Checkpoint 7.1
Author: STUDY GUIDE
AACSB: Reflective thinking
32
Copyright © 2011 Pearson Education, Inc.
75) A rent ceiling is
A) fair, because it helps all renters.
B) fair, because it insures that low-income families can rent apartments.
C) fair, because it helps all landlords.
D) unfair.
E) fair, because it helps more renters than it harms.
Skill: Level 2: Using definitions
Section: Checkpoint 7.1
Author: MyEconLab Web Site
7.2 Price Floors
1) A price floor is
A) the highest possible legal price that can be charged for a good or service.
B) usually equal to the equilibrium price established before the government imposed the price
floor.
C) the lowest legal price at which a good or service can be traded.
D) a legal price of zero that can be charged for a good or service.
E) almost always equal to the price ceiling.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: JC
AACSB: Reflective thinking
2) A price floor makes prices
A) below the price floor illegal.
B) above the price floor illegal.
C) below the equilibrium price illegal.
D) above the equilibrium price illegal.
E) None of the above answers is correct.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: SB
AACSB: Reflective thinking
33
Copyright © 2011 Pearson Education, Inc.
3) Which of the following is an example of a price floor?
A) a law passed in a city to lower apartment rents by setting the maximum price that can be
charged for rent
B) an equilibrium price
C) a minimum wage law
D) a law setting the highest price that can legally be charged for a gallon of gasoline.
E) None of the above answers give examples of a price floor.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: TS
AACSB: Reflective thinking
4) A price floor set above the equilibrium price
A) creates a surplus.
B) creates a shortage.
C) creates excess demand.
D) balances supply and demand.
E) has no effect.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: SA
AACSB: Reflective thinking
5) A price floor
A) changes the equilibrium price if it is imposed in black markets.
B) changes the price and quantity if it is set below the equilibrium price.
C) changes the price and quantity if it is set above the equilibrium price.
D) does not create a black market if it is set above the equilibrium price.
E) changes the price and quantity only if it equals the equilibrium price.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: SA
AACSB: Reflective thinking
34
Copyright © 2011 Pearson Education, Inc.
6) Suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price
floor of $5 per gallon of milk, the
A) quantity supplied of milk falls short of the quantity demanded.
B) quantity supplied of milk exceeds the quantity demanded.
C) supply increases.
D) demand decreases.
E) price of milk remains $4 per gallon.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: SA
AACSB: Reflective thinking
7) In the labor market, as wages rise, households
A) decrease the quantity of labor supplied.
B) increase the quantity of labor supplied.
C) decrease the quantity of labor demanded.
D) increase the quantity of labor demanded.
E) increase the supply of labor.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: SB
AACSB: Reflective thinking
8) A stated goal of a minimum wage is to
A) increase government tax revenue.
B) stabilize production costs.
C) boost the incomes of low-wage earners.
D) decrease business profits.
E) increase business profits by making the labor market more efficient.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: SB
AACSB: Reflective thinking
35
Copyright © 2011 Pearson Education, Inc.
9) A minimum wage law in a competitive labor market
A) creates a shortage of labor.
B) causes equality between the quantity of labor supplied and the quantity demanded.
C) creates a surplus of labor.
D) lowers the wage rate paid to workers.
E) has an impact only if it is set below the equilibrium wage rate.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: TS
AACSB: Reflective thinking
10) Why do some workers lose their job when a minimum wage level is increased?
A) The increase in labor costs decreases the supply of the product, thereby raising the price of
the good so that the equilibrium quantity decreases to zero.
B) The increase in the wage rate decreases the quantity of labor demanded.
C) The demand for labor is perfectly inelastic.
D) The supply of labor decreases.
E) The demand for labor is perfectly elastic.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: TS
AACSB: Reflective thinking
11) A minimum wage increases unemployment by
A) increasing the quantity of labor demanded.
B) decreasing the quantity of labor demanded.
C) shifting only the labor supply curve rightward.
D) shifting only the labor demand curve leftward.
E) shifting the labor supply curve rightward and shifting the labor demand curve leftward.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: SB
AACSB: Reflective thinking
36
Copyright © 2011 Pearson Education, Inc.
12) Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour. An increase in
the minimum wage to $7.50 per hour leads to
A) a surplus of housekeepers.
B) a shortage of housekeepers.
C) no change in the market for housekeepers.
D) an increase in the quantity of housekeepers supplied.
E) unemployment of housekeepers.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: JC
AACSB: Analytical reasoning
13) Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate
the equilibrium quantity of apricot pickers employed is 14,000. If the minimum wage is set at
$7.50 per hour, then the
A) quantity of apricot pickers employed increases.
B) quantity of apricot pickers employed decreases.
C) quantity of apricot pickers employed does not change.
D) wage rate for apricot pickers decreases.
E) quantity of apricot pickers demanded does not change and the quantity of apricot pickers
supplied does not change.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: JC
AACSB: Analytical reasoning
14) Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in
St. Louis and $9.05 in Raleigh. An increase in the minimum wage to $7.50 per hour results in
unemployment of landscapers in
A) Little Rock and St. Louis.
B) only Raleigh.
C) Little Rock, St. Louis, and Raleigh.
D) only Little Rock.
E) St. Louis and Raleigh.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: JC
AACSB: Analytical reasoning
37
Copyright © 2011 Pearson Education, Inc.
15) Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at
that wage rate the equilibrium quantity of apricot pickers is 14,000. If the minimum wage is set
at $7.50 per hour, then the
A) quantity of apricot pickers employed increases.
B) quantity of apricot pickers employed decreases.
C) quantity of apricot pickers employed does not change.
D) wage rate for apricot pickers increases.
E) some apricot pickers are unemployed.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: JC
AACSB: Analytical reasoning
16) The labor demand and labor supply schedules are given in the table above. If a minimum
wage of $11 per hour is imposed,
A) a surplus of 300 workers occurs.
B) there is no shortage or surplus of workers.
C) 900 workers are employed.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: SA
AACSB: Analytical reasoning
38
Copyright © 2011 Pearson Education, Inc.
17) The labor demand and labor supply schedules are given in the table above. If a minimum
wage of $9 per hour is imposed,
A) a surplus of 300 workers occurs.
B) a shortage of 300 workers occurs.
C) there is no surplus or shortage of workers.
D) the quantity demanded is 1,000 workers.
E) there is unemployment of 700 workers.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: SA
AACSB: Analytical reasoning
18) The figure above shows the labor market in a region. For a minimum wage to change the
wage rate and amount of employment, it must be
A) left to the forces of supply and demand.
B) set above $6 an hour.
C) set equal to $6 an hour.
D) set below $6 an hour.
E) set at $12 per hour.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: SA
AACSB: Analytical reasoning
39
Copyright © 2011 Pearson Education, Inc.
19) The figure above shows the labor market in a region. If a minimum wage of $8 an hour is
imposed, then there are ________ unemployed workers.
A) 20,000
B) 40,000
C) 60,000
D) 80,000
E) zero
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: SA
AACSB: Analytical reasoning
20) The figure above shows the labor market in a region. If a minimum wage of $8 an hour is
imposed, then the quantity of labor supplied is ________ and the quantity of labor demanded is
________.
A) 60,000; 60,000
B) 80,000; 40,000
C) 40,000; 60,000
D) 60,000; 40,000
E) 40,000; 40,000
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: SA
AACSB: Analytical reasoning
21) The figure above shows the labor market in a region. In which of the following cases would
the amount of unemployment be the largest?
A) when the market is at its equilibrium, with no minimum wage
B) when a minimum wage of $4 an hour is imposed
C) when a minimum wage of $6 an hour is imposed
D) when a minimum wage of $8 an hour is imposed
E) None of the above because the market will adjust so that there is no unemployment.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: MR
AACSB: Analytical reasoning
40
Copyright © 2011 Pearson Education, Inc.
22) One result of the minimum wage is
A) a black market for labor that pays more than the minimum wage.
B) a black market for labor that pays less than the minimum wage.
C) decreased job search activity.
D) a decrease in unemployment among poor and unskilled workers.
E) an increase in employment among poor and unskilled workers.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: JC
AACSB: Reflective thinking
23) One result of a minimum wage is
A) illegal hiring of people at wages below the minimum wage.
B) more people with jobs.
C) a change in the equilibrium wage.
D) lower costs paid by firms.
E) fewer people searching for work because they realize that firms have decreased the number of
people hired.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: SB
AACSB: Reflective thinking
24) A minimum wage law
A) lowers the wage rate of workers who are able to get a job.
B) increases employment.
C) increases the time spent searching by workers who cannot find a job.
D) creates efficiency in the labor market.
E) must be set below the equilibrium wage rate in order to have an impact.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: TS
AACSB: Reflective thinking
