Multiple Choice Quiz


1	Minimum wage laws have traditionally been
		A)	sufficient to keep single adults above the poverty line.
		B)	sufficient to keep families of four above the poverty line.
		C)	insufficient to keep single adults above the poverty line.
		D)	set and not increased.


2	For the minimum wage to be "a living wage" it would
		A)	have to have been $20 per hour in 2002.
		B)	have to fall to $4 per hour.
		C)	have to remain at its 2002 level of $5.15.
		D)	have to have been more than $8 in 2002.


3	For a minimum wage to be relevant it must be
		A)	above equilibrium.
		B)	above what the average person makes.
		C)	below equilibrium.
		D)	at equilibrium.


4	An increase in the minimum wage from below equilibrium to equilibrium
		A)	has no effect on the amount of labor hired.
		B)	reduces the amount of labor hired.
		C)	increases the amount of labor hired.
		D)	increase the cost to employers.


5	An increase in the minimum wage ________ producer surplus that goes to ________.
		A)	increases; firms
		B)	decreases; firms
		C)	increases; workers
		D)	decreases; workers


6	An increase in the minimum wage ________ consumer surplus that goes to ________.
		A)	increases; firms
		B)	decreases; firms
		C)	increases; workers
		D)	decreases; workers


7	A firm wishing to hire entry-level labor must pay _____ minimum wage.
		A)	no more than the
		B)	no less than the
		C)	exactly the
		D)	within 10 cents either way of the


8	Some economists argue that workers will respond to an increase in the minimum wage by _______ which will cause the cost to employers to diminish.
		A)	slacking off
		B)	demanding more work
		C)	working harder
		D)	retiring


9	If demand for labor is ______ then the impact of an increase in the minimum wage on unemployment will be slight (though not zero).
		A)	perfectly elastic
		B)	elastic
		C)	unit elastic
		D)	inelastic


10	Under current estimates of the elasticity of demand for teen labor, an increase in the minimum wage from $5.15 to $5.55 would _________ teenage unemployment by ______.
		A)	increase ; 1 to 3%
		B)	decrease ; 1 to 3%
		C)	increase ; 20 to 25%
		D)	decrease; 20 to 25%


11	Some economists argue that a minimum wage will transfer spending power from firm owners to workers which will cause
		A)	consumption to rise, increasing GDP.
		B)	saving to rise, increasing GDP.
		C)	investment to rise, increasing GDP.
		D)	consumption to fall, decreasing GDP.

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