Multiple Choice Answers

A number of states have a minimum wage that is higher than the federal minimum. In those states that impose a minimum wage above $7.25 an hour, it is more likely that the minimum wage acts as a binding:

A. price floor, causing excess supply in the market.
B. price floor, causing excess demand in the market.
C. price ceiling, causing excess supply in the market.
D. price ceiling, causing excess demand in the market.

2.Recently Stuyvesant Town and Peter Cooper Village in Manhattan were sold for redevelopment. These villages had been rent controlled, but now that these neighborhoods are no longer rent controlled, one would expect:
A. the houses to be not as well maintained since rent will be so high.
B. the housing shortage in the neighborhood to worsen.
C. the rent to rise in those neighborhoods.
D. the quantity of rentals demanded to rise.
Taxi medallions were issued in New York City to:

A. help commuters afford transportation.
B. increase the wages of taxi drivers.
C. help new immigrants find jobs.
D. raise revenue for the city.

The U.S. imposes substantial taxes on cigarettes but not on loose tobacco. When the tax on cigarettes went into effect, the demand for home cigarette rolling machines most likely:

A. decreased, causing the price of cigarette rolling machines to fall and the quantity of machines purchased to fall.
B. decreased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall.
C. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to rise.
D. increased, causing the price of cigarette rolling machines to rise and the quantity of machines purchased to fall.

A Wall Street Journal headline reads: “Cigar Shortage Draws New Brands into Market.” The shortage resulted from a renewed interest in smoking cigars. What best describes facts behind the headline?

A. Supply has shifted to the right. Price has fallen somewhat, but not enough to equilibrate supply and demand.
B. Demand has shifted to the right. Price has risen somewhat, increasing quantity supplied, but not enough to equal quantity demanded.
C. Demand has shifted to the right and price has risen to equilibrate supply and demand.
D. Supply has shifted to the left. Price has risen somewhat, but not enough to equilibrate supply and demand.

When people heard that there was a shortage of Furby dolls, they wanted even more of them. Because of this effect the pressure on the price of these dolls increased. The price of the dolls remained the same however. Thus, the shortage of these dolls:

A. increased.
B. decreased.
C. did not change.
D. may have increased or decreased.

Refer to the graph above. Given the quantity restriction of QR, a reduction in demand will:

A. have no impact on market price.
B. raise equilibrium quantity.
C. raise equilibrium price.
D. lower the market price.

8 Floods in the U.S. Midwest reduce the U.S. corn crop. Which graph depicts the effect of the floods on the U.S. corn market?

A. IV
B. III
C. I
D. II

9 Refer to the table above that depicts a third-party payer market. What is the price the supplier will charge for the quantity consumers demand if a $1 co-pay is established?

A. $7.
B. $4.
C. $2.
D. $1.

10 Refer to the graph above. If government establishes a price floor of $7.25 per hour, there will be a:

A. shortage of 300 labor hours.
B. shortage of 400 labor hours.
C. surplus of 300 labor hours.
D. surplus of 400 labor hours.