Question

A government has just imposed a binding price floor on the market for widgets. Anthony claims that this policy will reduce the total revenue of widget manufacturers. Is Anthony correct?

Yes. A binding price floor will always reduce the revenue of the producers.

Maybe. A binding price floor will reduce the producer's revenue when demand is elastic.

Given a model of a perfectly competitive market for unskilled labor, a minimum wage that is set above a market's equilibrium wage will result in

quantity demanded being larger than the quantity supplied of labor, that is, unemployment.

excess demand for labor, that is, a shortage of workers.

excess supply of labor, that is, unemployment.

excess supply of labor, that is, a shortage of workers.

Maybe. A binding price floor will reduce the producer's revenue when demand is inelastic.

No. A biding price floor will never reduce the producer's revenue.

Assuming a competitive market structure, the quantity sold in a market will decrease if the government

inceases a binding price floor in that market.

increases a binding price ceiling in that market.

increases a tax on the good sold in that market.

More than one of the above is correct.

Answer 1

Maybe. A binding price floor will reduce the producer's revenue when demand is elastic.
(Binding price floor means increase in price which would reduce the revenue only when demand is elastic.)

excess supply of labor, that is, unemployment.
(At minimum wage above equilibrium, supply of labor will be greater than demand for labor so there will be excess supply showing unemployment.)

More than one of the above is correct.
(Quantity sold will decrease when the government increases a binding price floor in that market. and increases a tax on the good sold in that market.)