An effective minimum wage will lead to unemployment.

True

False

As time goes by, the price elasticities of demand and supply for a good are both likely to increase.

True

False

When a demand curve shifts inward, the price elasticity of demand increases.

True

False

Perfectly elastic supply curves are horizontal.

True

False

If the price of Pepsi decreases, this should lead to a decrease in producer surplus for Coca-Cola.

True

False

Ceteris paribus, suppliers bear a greater burden of a tax when the supply curve is more elastic.

True

False

The demand for gondoliers is given by the equation P = 80 - 3Q and the supply is given by the equation P = 30 + 2Q. After a lengthy strike, the city council enacts a minimum wage of 62 florins per fortnight. As a result,

A.the wage rate rises by 12 florins, the number of gondoliers employed falls by 4, and a shortage of 10 gondoliers results.

B.the wage rate rises by 12 florins, the number of gondoliers employed falls by 4, and a surplus of 10 gondoliers results.

C.the wage rate rises by 12 florins, the number of gondoliers employed rises by 6, and a surplus of 10 gondoliers results.

D.neither price nor quantity changes.

Consider the market for all-beef burgers and the market for vegetarian pizza. Suppose a major outbreak of Mad Cow Disease leads to all of the cows in the U.S. being destroyed. As a result, all beef must now be shipped in from overseas. Which of the following will occur?

A.Consumer surplus decreases in the burger market, and producer surplus decreases in the veggie pizza market.

B.Producer surplus decreases in both markets.

C.Producer surplus decreases in the burger market while producer surplus increases in the veggie pizza market.

D.Producer and consumer surplus both increase in the burger market.

Lisa, Leslie, Lulu, and Lola all head out to decorate their separate dorm rooms for the coming year. Each is considering buying a bulletin board. These boards are priced at $20 locally and on-line. Lisa values a bulletin board at $40, Leslie at $35, Lulu at $25, and Lola at $15. Assuming each of these women behave rationally, how many of these women buy a bulletin board and what is the total consumer surplus generated by their purchases.

A.All 4 buy a bulletin board and their consumer surplus is $35.

B.3 of them buy a bulletin board and their consumer surplus is $35.

C.All 4 buy a bulletin board and their consumer surplus is $115.

D.3 of them buy a bulletin board and their consumer surplus is $40.