Chapter 4: Q. e (page 89)
When firms respond to minimum wage increases by shutting down entirely, who else is harmed besides their employees?
Consumers
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Consider Figure 4-1.The current demand and
supply curves are D₁ and S₁,at which the equilib
rium price and quantity areP,and Q₁.If firms
adopt an improved technique for producing this
good,which curve shifts,and in which direction
does it shift?What happens to the market clearing
price and to the equilibrium quantity?
The table below illustrates the demand and supply
schedules for seats on air flights between two cities:
What are the market price and equilibrium quantity in this market? Now suppose that federal
authorities limit the number of flights between the two cities to ensure that no more than 1,200 passengers can be flown. Evaluate the effects of this quota if price adjusts. (Hint: What price per
flight are the 1,200 passengers willing to pay?)
In advance of the recent increase in the U.S.
minimum wage rate,the government of the state
of Arizona decided to boost its own minimum
wage by an additional$1.60 per hour.This
pushed the wage rate earned by Arizona teenag
ers above the equilibrium wage rate in the teen
labor market.What is the predicted effect of this
action by Arizona's government on each of the
following?
a.The quantity of labor supplied by Arizona
teenagers
b.The quantity of labor demanded by employers
of Arizona teenagers
c.The number of unemployed Arizona teenagers
A city has decided to impose rent controls,and it
has established a rent ceiling below the previous
equilibrium rental rate for offices throughout
the city. How will the quantity of offices leased
by building, owners change?
Suppose that in Figure 4-4,the government
reduces the floor price of milk below the displayed
\(0.10-per-pound floor price,to\)0.08 per pound.
Will the excess quantity of milk supplied increase
or decrease asaconsequence?
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