1.Draw a supply and demand model. The supply curve should have a slope of 1. The demand curve should have a slope of -1.

The product is orange. Oranges for orange juice is grown in Florida. There was a terrible storm which decreased the production of oranges in Florida. What would be the results for the quantity and price of oranges from Florida?

a.quantity will increase; no change in price

b.quantity will decrease; price will increase

c.quantity will increase; price will increase

d.quantity will decrease; no change in price

e.quantity will increase; price will decrease

f.quantity will decrease; price will decrease

2.Suppose a scientific report states that fish contain dangerously high levels of mercury (toxic to humans). At the same time, the price of diesel fuel, used by fishermen to fuel their boats, falls. What is the effect on the market for fish?

A.A decrease in demand and supply; price and quantity sold rises.

B. A decrease in demand and supply; price and quantity sold falls.

C. A decrease in demand and an increase in supply; price falls but the change in quantity is ambiguous.

D. A decrease in demand and a fall in price and quantity sold.

3.When U.S. assets are more attractive to foreign investors the demand for dollars:

A.increases and the dollar value of foreign currency rises.

b. increases and the dollar value of foreign currency falls.

c. decreases and the dollar value of foreign currency falls.

d. increases and the dollar value of foreign currency rises.

Tensions

The growing push to raise the minimum wage to as much as $15 an hour is creating new issues in the workplace: While some of America's lowest-paid workers will get fatter paychecks, their veteran colleagues may feel underpaid.

So-called wage compression poses a financial and management challenge for employers, who say wage increases have rankled some staff unhappy that less experienced co-workers now earn the same wages they spent months or years striving to achieve.

AtGap(Links to an external site.)

Inc.andWal-Mart Stores(Links to an external site.)

Inc.,which recently increased wages, store managers have had to address employee questions about fairness and pay. Some companies have raised pay for veteran workers, and others plan to offer extra fringe benefits, fearing that valuable workers might otherwise jump ship.

Dozens of cities have passed wage increases in the past four years, and New York and California recently approved increases to $15 an hour. Cities considering similar measures include Flagstaff, Ariz.; Minneapolis; Washington, D.C.; Olympia, Wash. and others.

The Supreme Court's decision Monday not to take on a challenge to Seattle's minimum-wage rule removed one of the most significant legal tests of local wage laws.

"As you're raising that bottom, it's affecting everybody," saidCatherine Knowles,a district manager overseeing eight Mud Bay Inc. pet-supply stores in Washington state.

In Seattle, where city laws require many large employers to phase in a $15 minimum wage by 2017, Mud Bay store employees now earn at least $12 an hour, with 50-cent hourly pay hikes planned for September and January 2017.

Employees who had spent a year or two on the job before reaching the $12 hourly wage told managers that it felt unfair that newcomers were paid the same amount, Ms. Knowles said.

"They felt that they weren't able to get compensated for what they learned," she said.

Managers showed the workers copies of the company's pay scales and explained that, while the company was raising the minimum wage, it couldn't give everyone raises.

"I'd love to be able to pay you a dollar more but there are costs," Ms. Knowles told store employees, adding, "we're still in business to make money."

Some economists say minimum wage increases could boost productivity, curb worker turnover and prompt stronger spending from low-income families. Detractors warn wage hikes could come with higher prices for consumers and weigh employers down with hefty costs.

Workers are keenly sensitive about how their pay relates to that of others. Such considerations of fairness play a "profound role" in how many employers set pay, Princeton University economistAlan Krueger(Links to an external site.)

said in a 2013 speech. The minimum wage "serves as an anchor for other wages and a benchmark for fair pay," he said.

Gap won accolades in February 2014 for announcing it was raising pay to a minimum $10 for its more than 60,000 hourly employees the following year. The retailer has recorded a double-digit increase in job applicants since then, according to spokeswomanLaura Wilkinson,as well as increased employee retention.

A current Chicago-area Gap sales associate said the wage hikes prompted her to look for other work. She joined the company in 2013, earning $9.25 an hour, won a small raise in 2014 and had hoped to reach $11 by 2015. Instead, she was given $10 an hour last June, just like new employees, though she had been with the retailer for two years.

"Where is the reward for having some seniority?" said the employee. "You're back on the bottom rung and you fight just like they do now for the next raise."

Gap's leaders considered wage-compression issues before putting the change into place, and raised some employees' pay above $10 as a result, according to a company spokeswoman. She declined to comment on the employee's complaints.

Last year,Laura Jankowskiraised pay for entry-level employees at her three Tropical Smoothie Caf franchise locations on Long Island to comply with New York laws raising minimum pay for fast-food chains. New hires now earn $9.75 an hourthe same wage that the caf's shift leaders had been earning.

"I can't punish them," Ms. Jankowski said of the shift leaders. She raised their pay to $10.75 an hour, boosting prices by 30 to 50 cents to cover costs.She now schedules one less person per hour and expects employees to work faster.

Paul Osterman, a labor economist at the Massachusetts Institute of Technology, said wage compression could result in long-delayed raises for some workers. "In an era when wages have stagnated for people not just at minimum wage but for those around it, pressure on employers to raise wages of people just above the minimum might be a good thing," he said.

Among the shift leaders who got a raise at Ms. Jankowski's Port Jefferson, N.Y., store wasDanny Zambito.The 18-year-old high-school senior said he'd likely consider leaving a job that paid shift leaders the same as other workers.

"I personally would feel a little insulted," he said. "We are putting in that extra work."

When Virginia legislators considered proposals to raise the state minimum wage earlier this year,Lori Janke,owner of three clothing resale stores there, computed how an increase from $7.25 to $10.10 per hour would affect her 60-odd employees. Had the proposals passed, she projected the higher wages would have eaten up a fifth of her 10% profit margin; preserving the current wage scale, with veteran workers earning more than newcomers, would have consumed more than half of profits.

To offset those costs, Ms. Janke said she would have to cut out the role of either shift leaders or assistant managers and train all employees to handle every role, a change that would require morestringent screening of new hires. The proposals were all defeated in committee.

People derive more happiness from pay when they know they're earning more than co-workers, research shows. In a famous 1998 study by economistsSara SolnickandDavid Hemenway,half of 257 people surveyed said they would rather make $50,000 a year when others around them earned $25,000 than earn $100,000 while peers earned $200,000.

"One lesson we learned early on is people talk a lot about how they're compensated," saidMark Wittman,co-founder of Farm Hill, a prepared-food delivery service in Redwood City, Calif. Pay for Farm Hill's 100 hourly workers starts around $12.50 an hour, with longer-serving employees earning as much as $16 in the same roles. Mr. Wittman said he and managers will have to communicate very clearly with employees if the pay divide narrows between more and less-skilled workers.

He may also reward long-serving workers with extra benefits, such as time off or discretion over scheduling.

"You have to either maintain the gap or make up for it in some other way," he said.

4.Question: Per the article, who is upset with the higher minimum wage pay?

FYI: ***Employees who are disgruntled and have low work confidence could be disruptive to a business because of lower productivity and could negatively affect other workers.***

Group of answer choices

Less experienced employees

More experienced employees

5.This is for the Tension article. Use what you've learned from the supply and demand model. After implementing this _____________ the model suggests that ____________________ for labor.

a.Quantity floor; quantity supplied will be greater than quantity demanded

b.Price floor; quantity supplied will equal quantity demanded

c.Price floor; quantity supplied will be greater than quantity demanded

d.Quantity floor; quantity supplied will equal quantity demanded

e.Price ceiling; quantity supplied will be less than quantity demanded

f.Quantity ceiling; quantity supplied will be less than quantity demanded

6.This is for the Tension article. Per the article, managers who now have to adhere to the wage law will see their costs _____________ for the firm. As a manager, this will give them __________ incentive to _____________ the price for their products.

a.Increase; more; decrease

b.Decrease; less; increase

c.Increase; more; increase

d.Decrease; more; decrease

e.Decrease; more; increase

f.Increase; less; increase

7.This is for the Tension article. As a future manager, when a wage law, such as this, is instituted then you would want to demand ______________ workers and will create _____________ incentive to find a substitute for workers.

a.More; more

b.Less; less

c.More; less

d.Less; more