Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 7, Problem 5MCQ
To determine
To choose: The appropriate option to fill in the blanks in the given statement.
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Check out a sample textbook solutionStudents have asked these similar questions
A market with a price floor creates
Group of answer choices
A: a shortage of goods and services in the market.
B: a greater quantity demanded in the market than quantity supplied.
C: excess demand for goods and services.
D: a surplus of goods and services in the market.
1) As the price level falls, the value of money falls. True / False
2) When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a shortage of labor. True / False
Markets seek equilibrium, and the demand for goods and services will come to an equilibrium with supply of goods and services. When markets are not in equilibrium, surpluses and shortages, as well as underground markets, can exist. Sometimes, the government may want to intervene in markets to try to help reduce economic hardships.
Analyze the impact of an increase in the minimum wage from the current level to $15 per hour. How would the following be affected?
a. employment of people previously earning less than $15 per hour
b. the unemployment rate of teenagers
c. the availability of on-the-job training for low-skilled workers
d. the demand for high-skilled workers who are good substitutes for low-skilled workers
Review the mechanics of price floors and price ceilings. Why does a price floor lead to surpluses? Why does a price ceiling lead to shortages? Review consumer and producer surplus. A price floor will lead to a transfer of consumer surplus to producer…
Chapter 7 Solutions
Foundations of Economics (8th Edition)
Ch. 7 - Prob. 1SPPACh. 7 - Prob. 2SPPACh. 7 - Prob. 3SPPACh. 7 - Prob. 4SPPACh. 7 - Prob. 5SPPACh. 7 - Prob. 6SPPACh. 7 - Prob. 7SPPACh. 7 - Prob. 8SPPACh. 7 - Prob. 9SPPACh. 7 - Prob. 10SPPA
Ch. 7 - Prob. 11SPPACh. 7 - Prob. 1IAPACh. 7 - Prob. 2IAPACh. 7 - Prob. 3IAPACh. 7 - Prob. 4IAPACh. 7 - Prob. 5IAPACh. 7 - Prob. 6IAPACh. 7 - Prob. 7IAPACh. 7 - Prob. 8IAPACh. 7 - Prob. 9IAPACh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQ
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- Indian government realized free market price of wheat is very low. To increase farmers’ welfare government took the following steps: a) Suppose the government imposes a binding price floor in the wheat market. How this policy will affect the price, quantity demanded and quantity supplied of wheat. b) Wheat farmers complained that this binding price floor reduced their revenue. Explain how it reduced their revenue. c) In response to wheat farmers’ complaints, government purchases all the surplus quantity at the minimum price decided by the government. Who are the beneficiaries and who loses due to this price floor?arrow_forward15. Due to the outbreak of Covid 19, manufacturing sector employees were not able to work from home due to the nature of their job. All these resulted in a shortage of supply. The factor that lead to the change in supply here belongs to _______________. a. Taxation by the government b. Weather conditions c. State of Technology. d. Factors outside the economic sphere.arrow_forwardA case study dicusses the federal minimum wage law.a. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. using the supply and demand diagram of the market for unskilled labor, show the market wage,the number of workers who are employed, and the number of workers who are unemployed. Also show total payment to unskilled workers.b. Now suppose the secretary of labor proposes an increase in the minimum wage.What effect would this increase have on employment? does the change in employment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither?c. What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticities or neither?d.if the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to the unskilled workers. would you answer…arrow_forward
- wheat market was in equilibrium before the floods but floods washed away from the stock/supply of wheat. Furthermore, the expected shortage results in greater demand which leads to an increase in the price of wheat. how the import of wheat affects the situation. Does free Atta scheme of the government will able to meet current demand or control the wheat price?arrow_forward7 The Thai government actively intervenes in markets (Nophakhun Limsamarnphun, “Govt ImposesPrice Controls in Response to Complaints,” The Nation, May 12, 2012).a. The government increased the daily minimumwage by 40% to Bt300 (300 bahts ≈ $9.63).Show the effect of a higher minimum wage on the number of workers demanded, the supply of workers, and unemployment if the law is applied to the entire labor market.b. Show how the increase in the minimum wageand higher rental fees at major shopping malls and retail outlets affected the supply curve of ready-to-eat meals. Explain why the equilibrium price of a meal rose to Bt40 from Bt30.c. In response to complaints from citizens abouthigher prices of meals, the government imposed price controls on ten popular meals. Show the effect of these price controls in the market for meals.d. What is the likely effect of the price controls on meals on the labor market?arrow_forwardWhen the market price is lower than the equilibrium price, the result is excess ____.When the market price is higher than the equilibrium price, the result is excess _____. Question 1Answer a. Supply; demand b. Demand; demand c. Demand; supply d. Supply; supplyarrow_forward
- All the governments in the world are using price floor for farmers because____________. a. All of these b. it gives good income to the farmers c. it ensures supply of farm products d. it makes farmers continue to produce the same farm productarrow_forwardEconomics: Labor Economics Question: 1 Labor demand and supply of a market are given by w = 32 - 5Ed and w = 4 + 2Es. Please show work for each part. a.What is the equilibrium employment in this market? [a] b.What is the equilibrium wage in this market? [b] Question: 2 The marketplace is currently in equilibrium as indicated by the tangency condition shown below. Assume capital and labor are substitutes. Suppose technological improvements increase the productivity of capital but have no effect on the productivity of labor. In terms of its use of capital and labor what would you expect firms to do to re-establish equilibrium? (MPe/W) = (MPk/r) Thank you for your help and support Instructor Agent!arrow_forwardn the price system, A. consumers alone set the price. B. prices are set by government action. C. producers alone set the price. D. price is set by the interaction of supply and demand.arrow_forward
- An effective price floor causes the quantity exchanged to _______ and the price of the product to ______ compared to the market equilibrium. Question 4Answer a. decrease, decrease b. increase, increase c. increase, decrease d. decrease, increasearrow_forwarda. price ceiling. b. price surplus. c. price floor d. market equilibrium pricearrow_forward1.Illegal beer poses a great challenge to the beer market, explain how it affect domestic’s beer market through an appropriate demand-supply diagram.( need more explanation)arrow_forward
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