Chapter 6/Supply, Demand, And Government Policies ❖ 21
86. Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price
control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price
control
a.
causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium.
b.
causes the quantity supplied to increase by 40 units, relative to the initial equilibrium.
c.
results in some firms being more successful than others in selling their goods.
d.
All of the above are correct.
Figure 6-6
D
S
10 20 30 40 50 60 70 80 quantity
2
4
6
8
10
12
14
16
18
20 price
87. Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?
a.
$8
b.
$10
c.
$12
d.
$14
88. Refer to Figure 6-6. Which of the following price floors would be binding in this market?
a.
$6
b.
$8
c.
$10
d.
$12
89. Refer to Figure 6-6. Which of the following statements is correct?
a.
A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding.
b.
A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding.
c.
A price ceiling set at $9 would result in a surplus.
d.
A price floor set at $11 would result in a surplus.
22 ❖ Chapter 6/Supply, Demand, and Government Policies
90. Refer to Figure 6-6. Which of the following statements is not correct?
a.
A price ceiling set at $8 would be binding, but a price ceiling set at $12 would not be binding.
b.
A price floor set at $14 would be binding, but a price floor set at $8 would not be binding.
c.
A price ceiling set at $9 would result in a surplus.
d.
A price floor set at $11 would result in a surplus.
91. Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be
a.
no shortage.
b.
a shortage of 10 units.
c.
a shortage of 20 units.
d.
a shortage of 40 units.
92. Refer to Figure 6-6. If the government imposes a price ceiling of $12 on this market, then there
will be
a.
no shortage.
b.
a shortage of 10 units.
c.
a shortage of 20 units.
d.
a shortage of 40 units.
93. Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be
a.
no surplus.
b.
a surplus of 20 units.
c.
a surplus of 30 units.
d.
a surplus of 40 units.
94. Refer to Figure 6-6. If the government imposes a price floor of $14 on this market, then there will be
a.
no surplus.
b.
a surplus of 20 units.
c.
a surplus of 30 units.
d.
a surplus of 40 units.
95. Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?
a.
a price ceiling set at $8
b.
a price ceiling set at $12
c.
a price floor set at $8
d.
a price floor set at $12
Chapter 6/Supply, Demand, And Government Policies ❖ 23
Figure 6-7
D
S
10 20 30 40 50 60 70 80 quantity
1
2
3
4
5
6
7
8
9
10 price
96. Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at
a.
any price below $6.
b.
a price between $3 and $6.
c.
a price between $6 and $9.
d.
any price above $6.
97. Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at
a.
any price below $6.
b.
a price between $3 and $6.
c.
a price between $6 and $9.
d.
any price above $6.
98. Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?
a.
a price ceiling set at $4
b.
a price ceiling set at $5
c.
a price floor set at $7
d.
a price floor set at $8
99. Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?
a.
a price ceiling set at $4
b.
a price ceiling set at $5
c.
a price floor set at $7
d.
a price floor set at $8
24 ❖ Chapter 6/Supply, Demand, and Government Policies
100. Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,
a.
the quantity of the good supplied decreases by 20 units.
b.
the demand curve shifts to the left so as to now pass through the point (quantity = 40, price = $5).
c.
buyers’ total expenditure on the good decreases by $100.
d.
the price of the good continues to serve as the rationing mechanism.
101. Refer to Figure 6-7. Suppose a price floor of $7 is imposed on this market. As a result,
a.
buyers’ total expenditure on the good decreases by $20.
b.
the supply curve shifts to the left so as to now pass through the point (quantity = 40, price = $7).
c.
the quantity of the good demanded decreases by 20 units.
d.
the price of the good continues to serve as the rationing mechanism.
Figure 6-8
D
S
510 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 quantity
1
2
3
4
5
6
7
8
9
10 price
102. Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be
a.
no shortage of the good.
b.
a shortage of 40 units of the good.
c.
a shortage of 60 units of the good.
d.
a shortage of 85 units of the good.
103. Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be
a.
no surplus of the good.
b.
a surplus of 20 units of the good.
c.
a surplus of 30 units of the good.
d.
a surplus of 55 units of the good.
Chapter 6/Supply, Demand, And Government Policies ❖ 25
104. Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if
a.
a price ceiling of $4 is imposed.
b.
a price ceiling of $5 is imposed.
c.
a price floor of $3 is imposed.
d.
All of the above are correct.
105. Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the
good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars
per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that
quantity. If P1 – P2 = $3, then the price control is
a.
a price ceiling of $2.00.
b.
a price ceiling of $5.00.
c.
a price floor of $5.00.
d.
either a price ceiling of $2.00 or a price floor of $5.00.
Figure 6-9
D
S
3 6 9 12 15 18 21 24 27 30 quantity
1
2
3
4
5
6
7
8
9
10
11
12
price
106. Refer to Figure 6-9. A price ceiling set at
a.
$4 will be binding and will result in a shortage of 3 units.
b.
$4 will be binding and will result in a shortage of 6 units.
c.
$7 will be binding and will result in a surplus of 6 units.
d.
$7 will be binding and will result in a surplus of 12 units.
26 ❖ Chapter 6/Supply, Demand, and Government Policies
107. Refer to Figure 6-9. At which price would a price ceiling be binding?
a.
$4
b.
$5
c.
$6
d.
$7
108. Refer to Figure 6-9. At which price would a price ceiling be nonbinding?
a.
$2
b.
$3
c.
$4
d.
$6
109. Refer to Figure 6-9. A price floor set at
a.
$4 will be binding and will result in a shortage of 3 units.
b.
$4 will be binding and will result in a shortage of 6 units.
c.
$7 will be binding and will result in a surplus of 6 units.
d.
$7 will be binding and will result in a surplus of 12 units.
110. Refer to Figure 6-9. At which price would a price floor be binding?
a.
$6
b.
$5
c.
$4
d.
$3
111. Refer to Figure 6-9. At which price would a price floor be nonbinding?
a.
$8
b.
$7
c.
$6
d.
$5
Chapter 6/Supply, Demand, And Government Policies ❖ 27
Figure 6-10
2 4 6 8 10 12 14 16 18 20 quantity
2
4
6
8
10
12
14
16
18
20
22
24
price
112. Refer to Figure 6-10. A price ceiling set at
a.
$6 will be binding and will result in a shortage of 8 units.
b.
$6 will be binding and will result in a shortage of 4 units.
c.
$16 will be binding and will result in a shortage of 12 units.
d.
$16 will be binding and will result in a shortage of 6 units.
113. Refer to Figure 6-10. A price floor set at
a.
$6 will be binding and will result in a surplus of 8 units.
b.
$6 will be binding and will result in a surplus of 4 units.
c.
$16 will be binding and will result in a surplus of 12 units.
d.
$16 will be binding and will result in a surplus of 6 units.
28 ❖ Chapter 6/Supply, Demand, and Government Policies
Figure 6-11
DemandBDemandA
Supply
3 6 9 12 15 18 21 24 27 30 Quantity
3
6
9
12
15
18
21
24
27
30 Price
114. Refer to Figure 6-11. If the government imposes a price ceiling at $3, it would be
a.
binding if market demand is Demand A or Demand B.
b.
non-binding if market demand is Demand A or Demand B.
c.
binding if market demand is Demand A and non-binding if market demand is Demand B.
d.
non-binding if market demand is Demand A and binding if market demand is Demand B.
115. Refer to Figure 6-11. If the government imposes a price floor at $9, it would be
a.
binding if market demand is Demand A or Demand B.
b.
non-binding if market demand is Demand A or Demand B.
c.
binding if market demand is Demand A and non-binding if market demand is Demand B.
d.
non-binding if market demand is Demand A and binding if market demand is Demand B.
116. Refer to Figure 6-11. Which of the following statements is not correct?
a.
A government-imposed price of $9 would be a binding price floor if market demand is Demand A
and a binding price ceiling if market demand is Demand B.
b.
A government-imposed price of $15 would be a binding price ceiling if market demand is either
Demand A or Demand B.
c.
A government-imposed price of $3 would be a binding price ceiling if market demand is either
Demand A or Demand B.
d.
A government-imposed price of $12 would be a binding price floor if market demand is Demand A
and a non-binding price ceiling if market demand is Demand B.
Chapter 6/Supply, Demand, And Government Policies ❖ 29
Figure 6-12
D
S1
price ceiling
S2
price of gasoline
quantity of gasoline
P1
P2
P3
Q1Q3
117. Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts
from S1 to S2,
a.
the market price will increase to P3.
b.
a surplus will occur at the new market price of P2.
c.
the market price will stay at P1.
d.
a shortage will occur at the new market price of P2.
118. Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts
from S1 to S2, the resulting quantity of gasoline that is bought and sold is
a.
less than Q3.
b.
Q3.
c.
between Q1 and Q3.
d.
at least Q1.
119. Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in
the United States in the 1970s?
a.
Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the
price of crude oil in 1973, and there was a shortage of gasoline at that price.
b.
Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the
price of crude oil in 1973, and there was a shortage of gasoline at that price.
c.
Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the
price of crude oil in 1973, with no shortage of gasoline at that price.
d.
The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC
increased the price of crude oil in 1973.
30 ❖ Chapter 6/Supply, Demand, and Government Policies
Table 6-1
Price
Quantity
Demanded
Quantity
Supplied
$0
12
0
$1
10
2
$2
8
4
$3
6
6
$4
4
8
$5
2
10
$6
0
12
120. Refer to Table 6-1. Which of the following price ceilings would be binding in this market?
a.
$2
b.
$3
c.
$4
d.
$5
121. Refer to Table 6-1. Which of the following price floors would be binding in this market?
a.
$1
b.
$2
c.
$3
d.
$4
122. Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the
size of the shortage in this market?
a.
0 units
b.
2 units
c.
8 units
d.
10 units
123. Refer to Table 6-1. Suppose the government imposes a price ceiling of $5 on this market. What will be the
size of the shortage in this market?
a.
0 units
b.
2 units
c.
8 units
d.
10 units
Chapter 6/Supply, Demand, And Government Policies ❖ 31
124. Refer to Table 6-1. Suppose the government imposes a price floor of $1 on this market. What will be the
size of the surplus in this market?
a.
0 units
b.
2 units
c.
8 units
d.
10 units
125. Refer to Table 6-1. Suppose the government imposes a price floor of $5 on this market. What will be the
size of the surplus in this market?
a.
0 units
b.
2 units
c.
8 units
d.
10 units
Table 6-2
Price
Quantity
Demanded
Quantity
Supplied
$0
250
0
$5
200
75
$10
150
150
$15
100
225
$20
50
300
$25
0
375
126. Refer to Table 6-2. A price ceiling set at $5 will
a.
be binding and will result in a shortage of 50 units.
b.
be binding and will result in a shortage of 75 units.
c.
be binding and will result in a shortage of 125 units.
d.
not be binding.
127. Refer to Table 6-2. A price ceiling set at $15 will
a.
be binding and will result in a shortage of 50 units.
b.
be binding and will result in a shortage of 100 units.
c.
be binding and will result in a shortage of 125 units.
d.
not be binding.
32 ❖ Chapter 6/Supply, Demand, and Government Policies
128. Refer to Table 6-2. A price floor set at $20 will
a.
be binding and will result in a surplus of 50 units.
b.
be binding and will result in a surplus of 100 units.
c.
be binding and will result in a surplus of 250 units.
d.
not be binding.
129. Refer to Table 6-2. A price floor set at $5 will
a.
be binding and will result in a surplus of 50 units.
b.
be binding and will result in a surplus of 75 units.
c.
be binding and will result in a surplus of 125 units.
d.
not be binding.
Table 6-3
The following table contains the demand schedule and supply schedule for a market for a particular good.
Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium
price in this market.
Price
Quantity
Demanded
Quantity
Supplied
$0
15
0
$1
13
3
$2
11
6
$3
9
9
$4
7
12
$5
5
15
$6
3
18
130. Refer to Table 6-3. How many units of the good are sold after the imposition of the price floor?
a.
5
b.
9
c.
10
d.
15
131. Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers
convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The
resulting market price is
a.
$2.
b.
$3.
c.
$4.
d.
$5.
Chapter 6/Supply, Demand, And Government Policies ❖ 33
132. Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers
convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The
resulting shortage is
a.
0 units.
b.
2 units.
c.
5 units.
Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good.
Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium
price in this market.
Price
Quantity
Demanded
Quantity
Supplied
$0
15
0
$1
13
3
$2
11
6
$3
9
9
$4
7
12
$5
5
15
$6
3
18
133. Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?
a.
3
b.
9
c.
15
d.
18
134. Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers
convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The
resulting market price is
a.
$2.
b.
$3.
c.
$4.
d.
$5.
135. Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers
convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The
resulting shortage is
a.
0 units.
b.
4 units.
c.
5 units.
d.
10 units.
d.
7 units.
34 ❖ Chapter 6/Supply, Demand, and Government Policies
136. In the United States, before OPEC increased the price of crude oil in 1973, there was
a.
no price ceiling on gasoline.
b.
a nonbinding price ceiling on gasoline.
c.
a binding price ceiling on gasoline.
d.
a nonbinding price floor on gasoline.
137. In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that
a.
OPEC raised the price of crude oil in world markets.
b.
U.S. gasoline producers raised the price of gasoline.
c.
the U.S. government maintained a price ceiling on gasoline.
d.
Americans typically commuted long distances.
138. Economists blame the long lines at gasoline stations in the U.S. in the 1970s on
a.
U.S. government regulations pertaining to the price of gasoline.
b.
the Organization of Petroleum Exporting Countries (OPEC).
c.
major oil companies operating in the U.S.
d.
consumers who bought gasoline frequently, even when their cars’ gasoline tanks were nearly full.
139. When OPEC raised the price of crude oil in the 1970s, it caused the
a.
demand for gasoline to increase.
b.
demand for gasoline to decrease.
c.
supply of gasoline to increase.
d.
supply of gasoline to decrease.
140. When OPEC raised the price of crude oil in the 1970s, it caused the
a.
supply of gasoline to decrease.
b.
quantity of gasoline demanded to decrease.
c.
equilibrium price of gasoline to increase.
d.
All of the above are correct.
141. When OPEC raised the price of crude oil in the 1970s, it caused the United States’
a.
nonbinding price floor on gasoline to become binding.
b.
binding price floor on gasoline to become nonbinding.
c.
nonbinding price ceiling on gasoline to become binding.
d.
binding price ceiling on gasoline to become nonbinding.
Chapter 6/Supply, Demand, And Government Policies ❖ 35
142. Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on
a.
a sharp increase in the demand for gasoline that was brought on by the Vietnam War.
b.
the government’s policy of maintaining a price ceiling on gasoline.
c.
an indifference among U.S. consumers toward conservation.
d.
the lack of substitutes for crude oil.
143. Economists generally believe that rent control is
a.
an efficient and fair way to help the poor.
b.
inefficient but the best available means of solving a serious social problem.
c.
a highly inefficient way to help the poor raise their standard of living.
d.
an efficient way to allocate housing, but not a good way to help the poor.
144. One economist has argued that rent control is “the best way to destroy a city, other than bombing.” Why would
an economist say this?
a.
He fears that low rents will cause low-income people to move into the city, reducing the quality of
life for other people.
b.
He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in
the city.
c.
He fears that rent controls will cause a construction boom, which will make the city crowded and
more polluted.
d.
He fears that rent control will eliminate the incentive to maintain buildings, leading to a
deterioration of the city.
145. Rent control
a.
serves as an example of how a social problem can be alleviated or even solved by government
policies.
b.
serves as an example of a price ceiling.
c.
is regarded by most economists as an efficient way of helping the poor.
d.
is the most efficient way to allocate scarce housing resources.
146. The goal of rent control is to
a.
facilitate controlled economic experiments in urban areas.
b.
help landlords by assuring them a low vacancy rate for their apartments.
c.
help the poor by assuring them an adequate supply of apartments.
d.
help the poor by making housing more affordable.
36 ❖ Chapter 6/Supply, Demand, and Government Policies
147. Which of the following is not a rationing mechanism used by landlords in cities with rent control?
a.
waiting lists
b.
race
c.
price
d.
bribes
148. Under rent control, bribery is a mechanism to
a.
bring the total price of an apartment (including the bribe) closer to the equilibrium price.
b.
allocate housing to the poorest individuals in the market.
c.
force the total price of an apartment (including the bribe) to be less than the market price.
d.
allocate housing to the most deserving tenants.
149. Under rent control, landlords cease to be responsive to tenants’ concerns about the quality of the housing be-
cause
a.
with rent control, the government guarantees landlords a minimum level of profit.
b.
they become resigned to the fact that many of their apartments are going to be vacant at any given
time.
c.
with shortages and waiting lists, they have no incentive to maintain and improve their property.
d.
with rent control, it becomes the government’s responsibility to maintain rental housing.
150. Under rent control, tenants can expect
a.
lower rent and higher quality housing.
b.
lower rent and lower quality housing.
c.
higher rent and a shortage of rental housing.
d.
higher rent and a surplus of rental housing.
151. Which of the following is not a result of rent control?
a.
fewer new apartments offered for rent
b.
less maintenance provided by landlords
c.
bribery
d.
higher quality housing
152. Rent control
a.
is an example of a price ceiling.
b.
leads to a larger shortage of apartments in the long run than in the short run.
c.
leads to lower rents and, in the long run, to lower-quality housing.
d.
All of the above are correct.
Chapter 6/Supply, Demand, And Government Policies ❖ 37
153. In the housing market, supply and demand are
a.
more elastic in the short run than in the long run, and so rent control leads to a larger shortage of
apartments in the short run than in the long run.
b.
more elastic in the short run than in the long run, and so rent control leads to a larger shortage of
apartments in the long run than in the short run.
c.
more elastic in the long run than in the short run, and so rent control leads to a larger shortage of
apartments in the short run than in the long run.
d.
more elastic in the long run than in the short run, and so rent control leads to a larger shortage of
apartments in the long run than in the short run.
154. Rent control policies tend to cause
a.
relatively smaller shortages in the short run than in the long run because supply and demand tend to
be more elastic in the short run than in the long run.
b.
relatively larger shortages in the short run than in the long run because supply and demand tend to
be more elastic in the short run than in the long run.
c.
relatively larger shortages in the short run than in the long run because supply and demand tend to
be more inelastic in the short run than in the long run.
d.
relatively smaller shortages in the short run than in the long run because supply and demand tend to
be more inelastic in the short run than in the long run.
155. In the short run, rent control causes the quantity supplied
a.
and quantity demanded to fall.
b.
to fall and quantity demanded to rise.
c.
to rise and quantity demanded to fall.
d.
and quantity demanded to rise.
156. Which of the following is not a short-run effect of rent control on the housing market?
a.
reduced rents
b.
a large shortage
c.
a small increase in quantity demanded
d.
a small decrease in quantity supplied
157. Over time, housing shortages caused by rent control
a.
increase, because the demand for and supply of housing are less elastic in the long run.
b.
increase, because the demand for and supply of housing are more elastic in the long run.
c.
decrease, because the demand for and supply of housing are less elastic in the long run.
d.
decrease, because the demand for and supply of housing are more elastic in the long run.
38 ❖ Chapter 6/Supply, Demand, and Government Policies
158. Which of the following statements about the effects of rent control is correct?
a.
The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control
is a shortage of apartments.
b.
The short-run effect of rent control is a relatively small shortage of apartments, and the long-run
effect of rent control is a larger shortage of apartments.
c.
In the long run, rent control leads to a shortage of apartments and an improvement in the quality of
available apartments.
d.
The effects of rent control are very noticeable to the public in the short run because the primary
effects of rent control occur very quickly.
159. The long-run effects of rent controls are a good illustration of the principle that
a.
society faces a short-run tradeoff between unemployment and inflation.
b.
the cost of something is what you give up to get it.
c.
people respond to incentives.
d.
government can sometimes improve on market outcomes.
160. An alternative to rent-control laws that would not reduce the quantity of housing supplied is
a.
the payment by government of a fraction of a poor family’s rent.
b.
higher taxes on rental income earned by landlords.
c.
a policy that prevents landlords from evicting tenants.
d.
a policy that allows government to confiscate residential property for the purpose of commercial
development.
161. Which of the following is correct?
a.
Rent control and the minimum wage are both examples of price ceilings.
b.
Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor.
c.
Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling.
d.
Rent control and the minimum wage are both examples of price floors.
162. Which of the following is not correct? In a 2006 survey of Ph.D. economists,
a.
47 percent favored eliminating the minimum wage.
b.
14 percent would maintain the minimum wage at its current level.
c.
38 percent would increase the minimum wage.
d.
10 percent would decrease the minimum wage.
Chapter 6/Supply, Demand, And Government Policies ❖ 39
163. An example of a price floor is
a.
the regulation of gasoline prices in the U.S. in the 1970s.
b.
rent control.
c.
the minimum wage.
d.
any restriction on price that leads to a shortage.
164. The minimum wage is an example of a
a.
price ceiling.
b.
price floor.
c.
wage subsidy.
d.
tax.
165. Minimum-wage laws dictate the
a.
average price employers must pay for labor.
b.
highest price employers may pay for labor.
c.
lowest price employers may pay for labor.
d.
the highest and lowest prices employers may pay for labor.
166. The U.S. Congress first instituted a minimum wage in
a.
1776.
b.
1812.
c.
1938.
d.
1975.
167. The minimum wage was instituted to ensure workers
a.
a middle-class standard of living.
b.
employment.
c.
a minimally adequate standard of living.
d.
unemployment compensation.
168. In 2009, the U.S. minimum wage according to federal law was
a.
$4.25 per hour.
b.
$5.15 per hour.
c.
$5.75 per hour.
d.
$7.25 per hour.
40 ❖ Chapter 6/Supply, Demand, and Government Policies
169. Which of the following is not correct?
a.
Some states in the U.S. mandate minimum wages above the federal level.
b.
Most European nations have minimum-wage laws.
c.
The U.S. minimum wage is significantly higher than the minimum wages in France and the United
Kingdom.
d.
The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act.
170. If the minimum wage exceeds the equilibrium wage, then
a.
the quantity demanded of labor will exceed the quantity supplied.
b.
the quantity supplied of labor will exceed the quantity demanded.
c.
the minimum wage will not be binding.
d.
there will be no unemployment.
171. A minimum wage that is set below a market’s equilibrium wage will result in an excess
a.
demand for labor, that is, unemployment.
b.
demand for labor, that is, a shortage of workers.
c.
supply of labor, that is, unemployment.
d.
None of the above is correct.
172. A binding minimum wage
a.
alters both the quantity demanded and quantity supplied of labor.
b.
affects only the quantity of labor demanded; it does not affect the quantity of labor supplied.
c.
has no effect on the quantity of labor demanded or the quantity of labor supplied.
d.
causes only temporary unemployment because the market will adjust and eliminate any temporary
surplus of workers.
173. Which of the following is not correct?
a.
The economy contains many labor markets for different types of workers.
b.
The impact of the minimum wage depends on the skill and experience of the worker.
c.
The minimum wage is binding for workers with high skills and much experience.
d.
The minimum wage is not binding when the equilibrium wage is above the minimum wage.
174. The minimum wage has its greatest impact on the market for
a.
female labor.
b.
older labor.
c.
black labor.
d.
teenage labor.