Price floors are instituted because the government wants to:
a. help consumers.
b. help producers.
c. raise tax revenue.
d. prevent imports.
e. increase demand.
QUESTION 2A side effect of a price floor set above the equilibrium price is:
a. the new price is below equilibrium price.
b. an excess supply of the good is created.
c. an excess demand for the good is created.
d. the supply of the good decreases.
e. the demand for the good increases.
QUESTION 3A price floor is:
a. the lowest price a producer will accept.
b. the lowest price a consumer will pay.
c. a minimum price set by the government above equilibrium price.
d. a maximum price set by the government above equilibrium price
e. usually set equal to equilibrium price.
QUESTION 4A price floor (support price) set above equilibrium:
a. is a minimum legal price set by government above equilibrium.
b. causes the quantity supplied to exceed the quantity demanded.
c. creates a surplus.
d. can represent the effect of a minimum wage.
e. all of these.
QUESTION 5A legally mandated minimum wage is an example of:
a. the invisible hand principle. b. a price floor.
c. a price ceiling. d. a fringe benefit.
QUESTION 6If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?
a. An increase in quantity of unskilled labor demanded.
b. A decrease in the quantity of unskilled labor supplied.
c. A shortage of unskilled labor.
d. A surplus of unskilled labor (unemployment).
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