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[lorimar]

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!

[chavivi]

Question #1: An optimizing consumer will select a consumption bundle in which utility is maximized
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
D. driving a taxi in a large city is more dangerous than driving in a rural area.

Hence, the higher wage for urban taxi drivers can be viewed as compensation for the higher risk.

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.

The minimum wage in the U.S. is currently $6.55. Without the minimum-wage requirement, some workers who cannot get a job that pays $6.55 would be willing to work for less money, and some companies would be willing to hire them for less than $6.55. The minimum-wage requirement of $6.55 forces these workers out of the market and into unemployment (or the gray economy). As a result, the supply of labor is smaller and the equilibrium wage for unskilled labor is $6.55.