The economic analysis of minimum wage involves both normative and positive analysis. Consider the following consequences of a minimum wage:
a. The minimum wage law causes unemployment.
b. Unemployment would be lower without a minimum wage law.
c. Minimum wage laws benefit some workers and harm others.
d. The minimum wage should be more than $7.25 per hour.
Which of the consequences above are positive statements and which are normative statements?
A) a and b are positive statements, c and d are normative statement.
B) Only a is a positive statement, b, c, and d are normative statements.
C) a and c are positive statements, b and d are normative statements.
D) a, b, and c are positive statements and d is a normative statement.
D
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In the game in Scenario 13.7, the strategy pair that pays
A) $69,000 to each player is the only equilibrium. B) ($0, -$1000 ) is the only equilibrium. C) (-$1000, $0 ) is the only equilibrium. D) $0 to each player is the only equilibrium. E) $69,000 to each player and the strategy pair that pays $0 to each player are equilibria.
If the price of bubble gum changed in the market from 1 cent to 1.5 cents and Joe's Market didn't change the price it charges for the bubble gum, this behavior is likely due to
A) discretionary policy. B) economic laziness. C) large menu costs. D) small menu costs.
The presence of adverse selection:
A. reduces the efficiency of markets. B. increases the efficiency of markets. C. does not affect the efficiency of markets. D. makes the buyer less efficient and the seller more efficient.
Recently several food companies have adopted policies for "humane" treatment of animals to apply to providers of their meats. The food companies expect that their action will help differentiate their product from their competitors who have not adopted such policies. They expect that "differentiation" of their product will allow them to:
a) Do little to change their price because the food industry is a very competitive industry b) Lower price so they will be able to sell more product c) Raise price to cover higher input costs and get higher profit