Question

.t 17) Suppose the minimum wage is $4 per hour, and 1,100 correct statement. the minimum wage to $6 per hour, and 900 units are now hired. Choose the units of labour are hired. Then the A) Total wages paid to workers has fallen. B) The quantity of labour supplied is greater at the higher minimum wage C) The price elasticity of demand for labour is 0.5 D) There is unemployment in this labour market E) all of the above except A. 17) 18) Producer surplus is A) zero if price equals marginal cost B) the price of the good minus the value producers place on it. C) the value producers place on a good minus the price of the good. D) greater the more elastic the supply of the good. E) none of the above. 18) 19) Suppose the government introduces a ceiling on the fees that lawyers are permited to charge. Ii 19) the fee ceiling is setthe equilibrium wage rate, the amount of work done by lawyers the consumer surplus of people who hire lawyers firmsases; decrea , and the producer surplus of law A) above; decreases; decreases; decreases B) above; increases; increases; increases C) below; decreases; decreases; decreases D) below; decreases; increases; decreases E) below; increases; increases; increases 20) 20) Consumer surplus is A) the total amount paid for a good. b the difference between the maximum price cónsumers are willing to pay and the minimurm price producers are willing to accept. C) the total value to consumers of a good D) equal to the area under the demand curve E) the difference between the value of a good and the price paid for it, summed over the 21) When an effective production quota is applied in the market for wheat, the quantity produced The marginal social benefit, marginal social cost. quantity bought. and the priceT A) increases; rises; exceeds B) decreases; falls; is less than C) decreases; rises; exceeds D) decreases; rises; is less than E) increases; falls; is less than

Answer 1

17. There is unemployment in the labour market. With the increase in wage, the labour hired decreased from 1100 to 900. Thus, 200 workers got unemployed.

18. Producers surplus is the price of a good minus the value producers place for it. It is the difference between price and amount that producers are willing to accept.

19. Answer : below, decreases, increases, decreases.

With price ceiling, price is below the equilibrium wage. As a result, lawyers reduce the amount of work done. This leads to an increase in consumer surplus and decrease in producer surplus.

20. Consumer surplus is the difference between value of a good and the price paid for it, summed over the quantity bought. Consumer surplus is the difference between what consumer's are willing to pay and the price the actually pay.

21. Decreases, rises, exceeds

With the imposition of quota, the quantity is limited or decreased leading to a rise in prices. Since demand is greater than the supply, marginal social benefit exceeds marginal social costs.