Price Floors: Minimum Wage Practice Questions

A review of the jargon: Is the minimum wage a “price ceiling” or a “price floor?” *

a. price ceiling

b. price floor

Who is impacted most by a change in the minimum wage? *

a. unionized workers

b. senior citizens

c. stay-at-home parents

d. teenagers

Imagine that you can hire four low-skilled workers to move dirt with shovels at $5 an hour, or you can hire one skilled worker at $24 an hour to move the same amount of dirt with a skid loader. Who will you hire if the minimum wage increases from $5 per hour to $6.50 per hour? *

a. 4 low-skilled workers

b. 1 high-skilled worker

Suppose you’re doing some history research on shoe production in ancient Rome, during the reign of the famous Emperor Diocletian. Your records tell you how many shoes were produced each year in the Roman Empire, but it doesn’t tell you the price of shoes. You find a document that says that in the year 301, Emperor Diocletian issued an “edict on prices,” but you don’t know whether he imposed price ceilings or price floors—your Latin is a little rusty. However, you can clearly tell from the documents that the number of shoes actually sold in markets fell dramatically, and that both potential shoe sellers and potential shoe buyers were unhappy with the edict. With the information given, can you tell whether Diocletian imposed a ceiling or a floor? If so, which is it? (Yes, there really was an edict of Diocletian, and Wikipedia has excellent coverage of ancient Roman history.) *

a. Price ceiling

b. Price floor

c. Neither- it was a government shoe ration.

d. Indeterminate with the given information.

Courses See all

Series See all

Interactive Practice See all

The Best Econ News Articles

Free High School Teacher Trainings

High School Teaching Resources See all

University Teaching Resources See all

Practice Questions

Price Floors: Minimum Wage Practice Questions

Introduction

Supply, Demand, and Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Price Floors

Trade

Externalities

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Labor Markets

Public Goods and the Tragedy of the Commons

Asymmetric Information

Consumer Choice

Bonus Topics

Exam