Wage rate (dollars per hour) 10 Price (dollars per pizza) 20 s-MC Minimum IS 10
ID: 1166832 • Letter: W
Question
Wage rate (dollars per hour) 10 Price (dollars per pizza) 20 s-MC Minimum IS 10 D MB Quantity (thousands of workers) 20 The figure above shows supply and demand in the 1s market for labor. The government introduces a minimum wage of $7 per hour. 10 Quantity (thousands of pizzas per day) The figure above shows the market for pizza. 26) In the figure above, the number of available 24) In the figure above, if pizza production jobs is increases to 15,000 pizzas a day, then A) zero B) 3,000. C) 7,000. D) 4,000. E) 5,000. marginal benefitmarginal cost, and occurs A) exceeds; efficient production B) is below; underproduction C) exceeds; underproduction D) is below; overproduction E) exceeds; overproduction 27) When a rent ceiling below the equilibrium rent is put in place, the outcome is 25) When output is letis than the efficient level, A ) inefficient because marginal benefit is A) consumers are willing to pay more for B) the cost of production is greater than C) the marginal cost of producing the D) the production costs can't be E) the amount consumers are willing to B) efficient because marginal benefit is C) inefficient because marginal benefit is D) inefficient because marginal benefit E) efficient because marginal benefit greater than marginal cost. greater than marginal cost. less than marginal cost. equals marginal cost. equals marginal cost. another unit than it costs to produce the unit. the price consumers are willing to pay good must be greater than the marginal benefit from the good measured. pay equals the cost of production. 28) A price ceiling A) is an illegal price. B) is the maximum price that can legally be charged C) is the price that exists in a black market. D) Both answers A and B are correct. E) Both answers B and C are correct 29) A price floor makes prices A) below the price floor illegal B) above the equilibrium price illegal. C) above the price floor illegal. D) below the equilibrium price illegal. E) None of the above answers is correct.Explanation / Answer
24) At 15000 pizzas a day, MC = 15 and MB = 5
Answer is D) is below; overproduction
25) A) consumers are willing to pay more for another unit than it costs to produce the unit.
When output is less than efficient then demand is more than supply so consumers are willing to pay more price for the good.
26) C) 7000
Available jobs are 7000 at minimum wage of $ 7.
27) B) efficient because marginal benefit is greater than marginal cost.
Rent ceiling lies below the equilibrium rent. At ceiling marginal cost is greater than MC.
28) B) is the maximum price that can legally be charged.
When government fixed price of a product at a level lower than the equilibrium price, the price is called control price or price control by the government. This is done to control the interest of the consumers.
29) A) below the price floor illegal.
Price floor is the price set by the government above equilibrium price, When goods are sold below that price then it is illegal.
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