What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price, where must price ceilings and price floors be set to have an effect on the market
What will be an ideal response?
A price ceiling is a legally determined maximum price that sellers may charge for a good or service. A price floor is a legally determined minimum price that sellers may receive for a product or service. To have an effect on a market, price ceilings must be set below the competitive equilibrium price, and price floors must be set above the competitive equilibrium price.
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Assuming that MPC is .75, equal increases in government spending and tax collections by $10 billion will
A. increase the equilibrium real GDP by $10 billion. B. reduce the equilibrium real GDP by $10 billion. C. increase the equilibrium real GDP by $2.5 billion. D. leave the equilibrium real GDP unchanged.
U.S. imports and exports both fell during the first quarter of 2009. The value of these imports and exports would be reflected in the United States
A) capital account. B) current account. C) exchange rate account. D) financial account.
Which of the following is an example of a compensating wage differential?
A) Workers in a dynamite mine receive higher wages than if they worked in other jobs that require the same level of skills. B) Nurse anesthetists are paid less than anesthesiologists (who have medical degrees). C) In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs. D) Popular movie stars like George Clooney command much higher salaries than other talented but lesser-known actors.
The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit. If the wage is $5 per hour, the firm will hire
A) 10 units of labor per hour. B) 5 units of labor per hour. C) 2.5 units of labor per hour. D) 0 units of labor per hour.