Question

(42)If cooks are being paid $12 per hour by law in the state of California because the government in California concluded that the market determined wage of $8 per hour was too low for their labor services, it can be inferred that:

(a)The cooks are being paid a non-binding wage ceiling

(b)The cooks are being paid a binding maximum wage

(c)The cooks are being paid a binding minimum wage

(d)The cooks are being paid a non-binding wage floor

(43)Which of the following statements is true?

With reference to Q#42 above, a microeconomist who concludes that:

(a)The demand for the labor services of cooks exceeds its supply is incorrect

(b)The legal wage for a cook’s labor services will be set below the equilibrium wage is incorrect

(c)The market for the labor services of cooks will not clear at the equilibrium wage is correct

(d)All of the above

                                          

                                                                                  

                                                                  Table#1-Supply Schedule for Gold

Price of Gold\Per Ounce	Quantity Supplied of Gold\Per Ounce
$1575	1285
$1575	1546
$1575	1785
$1575	2897

(46)Suppose you are a market analyst for a company that specializes in the trade for gold in the international market and you are given the above market supply schedule for gold in Table#1 above, which of the following statements about the market supply curve for gold is true?

(a)The supply curve conforms to the law of supply

(b)The supply curve is vertically sloped

(c)The supply curve is negatively sloped

(d)None of the above                           

(47)As a market analyst, if you are told that the international gold market represented by the price-quantity data in Table#1 above is at equilibrium and you are also told that the demand curve for gold has an inverse relationship to price. Which of the following statements is false?

(a)The market clearing price is $1575

(b)The demand curve violates the law of demand

(c)The market price for gold on the demand curve may be above or below $1575

(d)Global consumers will buy more gold at a price less than $1575

                                     Table#2-Supply for Macabee Coffee Beans

Quantity Supplied Per Week (Millions of Bushels)	Price Per Bushel
6	$3.00
5	2.50
4	2.00
3	1.50
2	1.00
1	0.80

(52)In reference to Table#2 above, assume the price of Macabee’s coffee beans to be $0.90 per bushel. If the price were to increase to $2.40 per bushel, given ceteris paribus, the result would be a (an):

(a)Decrease in demand

(b)Increase in quantity supplied

(c)Increase in supply

(d)Any of the above

Answer 1

Q42) option C)

Since equilibrium market wage is low, & current wage is above the equilibrium level, so it is a case of binding minimum wage .

Q43) option D)

Legal wage is above the market clearing wage .

At this wage, supply is higher than the demand.

At this wage , hence market will not clear.

Q46) option D)

Supply curve is horizontal at the given market price level.

Q47)option A)

Since supply is horizontal at the current price = 1575, so demand will cut supply at this price only.

Q52) option. B).

If price rise, then quantity demanded falls & quantity supplied rises.

No change in position of demand & supply curves.