51
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49) The above figure shows a labor market with minimum wage equal to $16. In this figure,
what area equals the deadweight loss?
A) area A
B) area B
C) area C
D) area D
E) area E
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: KG
AACSB: Analytical reasoning
50) The above figure shows a labor market with minimum wage equal to $16. In this figure,
what area equals the resources lost because of job search?
A) area A
B) area B
C) area C
D) area D
E) area E
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: KG
AACSB: Analytical reasoning
52
Copyright © 2011 Pearson Education, Inc.
51) The above figure shows the market for biologists. The government decides to set a
minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the firms’
surplus equals ________.
A) $800
B) $900
C) $1,800
D) $400
E) $200
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: KG
AACSB: Analytical reasoning
53
Copyright © 2011 Pearson Education, Inc.
52) The above figure shows the market for biologists. The government decides to set a
minimum wage for biologists of $18 per hour. After this minimum wage is in effect, and taking
account of the resources lost in job search, workers’ surplus equals ________.
A) $800
B) $900
C) $400
D) $1,800
E) $200
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: KG
AACSB: Analytical reasoning
53) The above figure shows the market for biologists. The government decides to set a
minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the
deadweight loss equals ________.
A) $400
B) $200
C) $800
D) $1600
E) $100
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: KG
AACSB: Analytical reasoning
54) The above figure shows the market for biologists. The government decides to set a minimum
wage for biologists of $18 per hour. After this minimum wage is in effect, unemployment equals
________ workers .
A) 100
B) 300
C) 400
D) 500
E) 200
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: KG
AACSB: Analytical reasoning
54
Copyright © 2011 Pearson Education, Inc.
55) A price floor is considered
A) “fair” based only on the fair results view.
B) “fair” based only on the fair rules view.
C) “unfair” based on both the fair results and fair rules views.
D) “unfair” based only on the fair results view.
E) “fair” based on the fair results view and on the fair rules view.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: CD
AACSB: Ethical reasoning
56) Is the minimum wage fair?
A) Yes, because all workers benefit because they are paid more.
B) No, because it enhances the prospects of voluntary exchange.
C) No, because workers who lose their jobs are made worse off.
D) Yes, because firms must pay a wage closer to a living wage.
E) Yes, because workers need the extra income.
Skill: Level 4: Applying models
Section: Checkpoint 7.2
Author: MR
AACSB: Ethical reasoning
57) One of the reasons a minimum wage is unfair is because it
A) benefits all workers.
B) blocks voluntary exchange.
C) is imposed by government.
D) is below the equilibrium wage rate.
E) cannot be enforced.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: SB
AACSB: Ethical reasoning
55
Copyright © 2011 Pearson Education, Inc.
58) A minimum wage law set above the equilibrium wage rate is unfair because the minimum
wage
A) does not apply to all workers.
B) boosts the income of highly skilled workers.
C) benefits only those workers who are able to find and keep a job.
D) benefits nobody.
E) cannot be enforced.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: TS
AACSB: Ethical reasoning
59) Labor unions ________ increases in the minimum wage because an increase in the minimum
wage ________ the demand for union labor.
A) support; increases
B) support; decreases
C) oppose; increases
D) oppose; decreases
E) support; has no effect on
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: JC
AACSB: Reflective thinking
60) Labor unions support the minimum wage because
A) the increased unemployment is good for labor.
B) the value associated with the deadweight loss goes to labor unions.
C) labor unions prefer to operate in black markets.
D) it puts upward pressure on all wages.
E) union members are usually paid the minimum wage.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: SB
AACSB: Reflective thinking
56
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61) A price floor
A) is the highest price at which it is legal to trade a particular good, service, or factor of
production.
B) is the lowest price at which it is legal to trade a particular good, service, or factor of
production.
C) is an illegal price to charge.
D) is the equilibrium price when the stock market crashes.
E) is the lowest price for which the quantity demanded equals the quantity supplied.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: STUDY GUIDE
AACSB: Reflective thinking
62) A price floor is a price
A) below which a seller cannot legally sell.
B) above which a seller cannot legally sell.
C) that creates a shortage of the good if it is set above the equilibrium price.
D) Both answers A and C are correct.
E) Both answers B and C are correct.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: MyEconLab Web Site
AACSB: Reflective thinking
57
Copyright © 2011 Pearson Education, Inc.
63) The graph shows the labor market for painters. The lower the wage rate, the ________ is the
quantity of painters that firms demand and the ________ is the quantity of painters that
households are willing to supply.
A) greater; smaller
B) greater; greater
C) smaller; greater
D) smaller; smaller
E) None of the above answers is correct because both the demand and supply curves will shift in
response to the change in the wage rate.
Skill: Level 2: Using definitions
Section: Checkpoint 7.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
58
Copyright © 2011 Pearson Education, Inc.
64) To be effective in raising people’s wages, a minimum wage must be set
A) above the equilibrium wage rate.
B) below the equilibrium wage rate.
C) equal to the equilibrium wage rate.
D) below $7.
E) either above or below the equilibrium wage depending on whether the supply curve of labor
shifts rightward or leftward in response to the minimum wage.
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
65) A minimum wage set above the equilibrium wage rate
A) increases the quantity of labor services supplied.
B) decreases the quantity of labor services supplied.
C) has no effect on the quantity of labor services supplied.
D) shifts the labor supply curve rightward.
E) shifts the labor supply curve leftward.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: STUDY GUIDE
AACSB: Reflective thinking
66) A minimum wage set above the equilibrium wage will ________ the quantity of labor
demanded and ________ the quantity of labor supplied.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) not change; not change
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: MyEconLab Web Site
AACSB: Reflective thinking
59
Copyright © 2011 Pearson Education, Inc.
67) Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour. A
minimum wage law that creates a price floor of $8.50 an hour leads to
A) a surplus of lifeguards in Houston.
B) a shortage of lifeguards in Houston.
C) no changes in the lifeguard market.
D) a change in the quantity of lifeguards supplied but no change in the quantity of lifeguards
demanded.
E) an increase in the number of lifeguards employed.
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
68) The graph shows the labor market for teenagers in Atlanta. If the government sets a
minimum wage of $6 an hour, the number of teenagers employed is ________.
A) 7,000
B) 5,000
C) 4,000
D) 3,000
E) less than 3,000
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning
60
Copyright © 2011 Pearson Education, Inc.
69) If the minimum wage is above the equilibrium wage rate, then an increase in the minimum
wage ________ employment and ________ unemployment.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; increases
Skill: Level 1: Definition
Section: Checkpoint 7.2
Author: STUDY GUIDE
AACSB: Analytical reasoning
70) The graph shows the labor market for apple pickers in Ohio. If the government sets a
minimum wage of $5 an hour, ________ apple pickers are unemployed.
A) 6,000
B) 8,000
C) 10,000
D) 14,000
E) more than 14,000
Skill: Level 3: Using models
Section: Checkpoint 7.2
Author: MyEconLab Web Site
AACSB: Analytical reasoning