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[barend31]

Question #1: An optimizing consumer will select a consumption bundle in which utility is maximized

A. as long as prices are minimized.
B. when income is maximized.
C. if indifference curves are linear.
D. subject to constraints imposed by the budget.

Question #2: Taxi drivers in large cities are likely to earn more than taxi drivers in rural areas earn. One reason for this wage differential could be that

A. driving in a large city is more fun than driving in a rural area.
B. driving in a large city is easier than driving in a rural area.
C. a taxi driver in a large city is unlikely to hit or be hit by an animal.
D. driving a taxi in a large city is more dangerous than driving in a rural area.


Question 3: Which of the following statements about minimum-wage laws is correct?

A. Minimum-wage laws force a market imbalance between the supply and demand for labor.
B. Minimum-wage laws increase the efficiency of labor markets.
C. Minimum-wage laws are typically associated with a rise in employment among the poor.
D. Minimum-wage laws are most effective at alleviating poverty when labor demand is highly elastic.

Thanks!

[golding]

Question #1: An optimizing consumer will select a consumption bundle in which utility is maximized

A. as long as prices are minimized.
B. when income is maximized.
C. if indifference curves are linear.
D. subject to constraints imposed by the budget.

Question #2: Taxi drivers in large cities are likely to earn more than taxi drivers in rural areas earn. One reason for this wage differential could be that

A. driving in a large city is more fun than driving in a rural area.
B. driving in a large city is easier than driving in a rural area.
C. a taxi driver in a large city is unlikely to hit or be hit by an animal.
D. driving a taxi in a large city is more dangerous than driving in a rural area.


Question 3: Which of the following statements about minimum-wage laws is correct?

A. Minimum-wage laws force a market imbalance between the supply and demand for labor.
B. Minimum-wage laws increase the efficiency of labor markets.
C. Minimum-wage laws are typically associated with a rise in employment among the poor.
D. Minimum-wage laws are most effective at alleviating poverty when labor demand is highly elastic.

Thanks!

All the questions are correct. .

Q 1 ans D
Q 2 ans D (as A,B,C are all going to reduce the wage of city driver as they are pointing that it is easier to drive in city but D is pointing that it is difficult to drive in city resulting in high wages)
Q3 ans A (as the govt increases the wage of labour the supply increases and demand reduces creating a problem of excess supply where supply is more than demand)

[rushford79]

I hope these are not on a test.
#1 would seem to be D, but an optimizing consumer will optimize utility in all instances. In fact this Idea that utility is optimized in the whole underpinning of free-market economics theory. It is the invisible hand.

#2 is wrong.
It has nothing to do with any of the reasons given. In a urban area you have many more people needing a taxi and it can be possible for a taxi to almost always have a fare in the car. In a rural area the taxi drives empty to the fare, takes them to their destination and goes empty back home to wait for the next fare it must travel to. Not only is the operator able to get fewer fares he spends far more in fuel and time in servicing them. The result is that there is less profit available.

#3 is D) This question is truly horrible. You can not force an imbalance where an imbalance already exists.
The only answer here that relates to minimum wage laws at all is D because the idea of a minimum wage was to alleviate poverty by preventing the abuse of the working poor.