Topic 8 Quiz
1. Government vouchers to purchase food, also known as food stamps, are an example of
a. permanent income.
b. a negative income tax.
c. life-cycle income.
d. an in-kind transfer.
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Correct
Solution
Correct Response
d
2. If the wages of a dentist increase, which of the following statements is not true?
a. Her hours of labor supplied may decrease.
b. Her opportunity cost of leisure decreases.
c. Her opportunity cost of leisure increases.
d. Her hours of labor supplied may increase.
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Incorrect
Solution
Correct Response
b
3.
Figure 18-5
Refer to Figure 18-5. If the relevant labor supply curve is S2 and the current wage is W1,
an increase in the minimum wage could restore equilibrium in the market.
the quantity of labor demanded exceeds the quantity of labor supplied.
there is a surplus of labor.
firms will need to raise the wage to restore equilibrium.
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Correct
Solution
Correct Response
C
4. Suppose that an industrial accident at a factory destroys a significant number of high-speed blenders
that bartenders use to mix frozen drinks. What will happen in the labor market for bartenders?
a. Both wages and employment will decrease.
b. Both wages and employment will increase.
c. Wages will decrease, and employment will increase.
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