Suppose that a labor market is initially in equilibrium. If the minimum wage is set above the initial equilibrium wage rate:
A. all workers in the labor market will be better off, receiving a higher wage per hour.
B. the labor supply curve will shift to the right.
C. the quantity demanded of labor will decrease along the given labor demand curve.
D. All of these
Answer: C
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When there is reason to think that the existing structure of incentives will cause individuals in the market to act in ways that are inconsistent with ideal economic efficiency, economists say that
a. market failure is present. b. democratic political decision-making will lead to the ideal efficient outcome. c. government action, however well intended, cannot improve the situation. d. government failure is present.
“People who make more money should pay higher taxes” is an example of
A. the benefits principle. B. horizontal equity. C. vertical efficiency. D. the ability-to-pay principle.
Which case below best represents a case of price discrimination?
A. A professional baseball team pays two players with identical batting averages different salaries. B. A utility company charges less for electricity used during "off-peak" hours, when it does not have to operate its less-efficient generating plants. C. A major airline sells tickets to senior citizens at lower prices than to other passengers. D. An insurance company offers discounts to safe drivers.
If the economy is operating in the relatively steep (upper) portion of its aggregate supply curve, a reduction in the money supply will:
A. increase the interest rate and increase employment. B. reduce the interest rate and increase employment. C. increase the interest rate and reduce the price level, assuming it is flexible downward. D. reduce the interest rate and increase the price level.