What was your hourly wage in your most recent job? 1.More than $15 2.$10-$15 3.$6-$10 4.$5-$6 5.Less than $5 6.I ‘ve never had a wage job. 7.I don’t remember.

A minimum wage rate is set 20% higher than the equilibrium wage. This causes total wages received by laborers to rise only if A)Labor supply is elastic. B)Labor supply is inelastic. C)Labor demand is elastic. D)Labor demand is inelastic. E)Employers are irrational.

Why is that? Minimum wage moves quantity to a point on which curve? Demand or supply? On the DEMAND curve. Firms are not forced to hire more labor than they want. If you move up the demand curve and revenue rises, is demand elastic or inelastic? Inelastic.

If a price floor is set on some good at a price higher than its equilibrium price, A) The good will be in excess supply. B) The good will be in excess demand. C) Neither prices nor quantities will be affected.

If a price floor is set on some good at a price lower than its equilibrium price, 1.The good will be in excess supply. 2.The good will be in excess demand. 3.Neither prices nor quantities will change.

And back to our lecture…

The supply curve slopes up. The demand curve slopes down. If a price ceiling is set at a price lower than the equilibrium price, what happens to the price and the quantity sold? A)Price and quantity both fall. B)Price falls, quantity rises. C) Neither changes. D)Price rises, quantity falls. E)Price falls, quantity rises.

The supply curve slopes up. The demand curve slopes down. If a price ceiling is set at a price higher than the equilibrium price, what happens to the equilibrium price and quantity? A)Price and quantity both fall. B)Price falls, quantity rises. C)Neither changes D)Price rises, quantity falls. E)Price falls, quantity rises.

The demand elasticity is –1/2. The supply elasticity is +1. A price ceiling that is 20% below equilibrium price will cause the new equilibrium quantity to A)Fall by 20%. B)Rise by 10%. C)Fall by 10%. D)Rise by 20%. E)Remain unchanged.

Why is this? Price ceiling forces price down by 20% and results in excess demand. New quantity will be on supply curve. Suppliers are not forced to sell. Supply elasticity is 1, so a 20% fall in price results in a 20% fall in quantity.