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# Quiz1 - Quiz#2 Econ 004 Spring 2007 Name Last 4(PSU ID...

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Quiz #2 – Econ 004, Spring 2007 Name _______________________________ Last 4 (PSU ID) _______ Answer A for True and B for False 1. If the (expected) opportunity costs of going to Philadelphia over the weekend exceed the (expected) opportunity costs of staying here in happy valley (over the same weekend) then according to rational decision making, you should go to Philadelphia. 2. If the minimum wage is set below the ‘market clearing’ wage then we say that the minimum wage is non-binding and thus, the equilibrium wage and employment level is the same with or without the (non- binding) minimum wage. Suppose the labor market is characterized by the following two equations: Nd = 100 – 10 (w) Ns = 40 + 5 (w) 3. Given these labor market conditions, the equilibrium or market clearing wage is: A) 7 B) 5 C) 4 D) 6 E) none of the above 4. Given these labor market conditions, the equilibrium or market clearing level of employment is: A) 130 B) 40 C) 140 D) 60 E) none of the above 5. Suppose the government instituted a minimum wage of \$ 8. The number of people unemployed would be: A) None: \$8 is the market clearing wage B) 20 C) 30 D) 60 E) None of the above 6. Suppose the government instituted a minimum wage of \$ 8. The number of people employed would be: A) 10 B) 20 C) 30 D) 40 E) none of the above 7. Suppose the government instituted a minimum wage of \$ 10. The number of people willing to work at \$10 per hour is: A) 60 B) 90 C) 50 D) 160 E) None of the above 8) Currently in the US, the real minimum wage, as measured by it’s real purchasing power, is as high as it has ever been. 9) Rational decision makers always choose the alternative with the highest opportunity costs. 10) According to that dam example, as long as the total benefits of three dams exceed the total costs of the three dams then the government should build the three dams. Form A

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Quiz #2 – Econ 004, Spring 2007 Name _______________________________ Last 4 (PSU ID) _______ Answer A for True and B for False 1) Currently in the US, the real minimum wage, as measured by it’s real purchasing power, is as high as it has ever been. 2) Rational decision makers always choose the alternative with the highest opportunity costs. 3) According to that dam example, as long as the total benefits of three dams exceed the total costs of the three dams then the government should build the three dams. 4. If the (expected) opportunity costs of going to Philadelphia over the weekend exceed the (expected) opportunity costs of staying here in happy valley (over the same weekend) then according to rational decision making, you should go to Philadelphia. Suppose the labor market is characterized by the following two equations:
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Quiz1 - Quiz#2 Econ 004 Spring 2007 Name Last 4(PSU ID...

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