9. Minimum wage laws cause unemployment because the legal minimum wage is set
(A) Below the market wage, causing labor demand to be greater than labor supply.
(B) Below the market wage, causing labor demand to be less than labor supply.
(C) Above the market wage, causing labor demand to be greater than labor supply.
(D) Above the market wage, causing labor demand to be less than labor supply.
(E) Too low.

10. Suppose the Fed decreases the money supply. In response households and firms will ______ short term assets and this will drive ______ interest rates. (A) buy; up (B) buy; down (C) sell; up (D) sell; down

1. Figure 1 demonstrates that (A) In the short run, the monopolistic competitor produces an output \( Q_{b} \) but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, \( Q_{a} \). (B) It is not possible for a monopolistic competitor to produce the productively efficient output level, \( Q_{a} \), because of product differentiation. (C) It is possible for a monopolistic competitor to produce the productively efficient output level, \( Q_{a} \), if it is willing to lower its price from \( P_{b} \) to \( P_{a} \). (D) In the long run, the monopolistic competitor produces the minimum-cost output level, \( Q_{a} \), but in the short run its output of \( Q_{b} \) is not cost minimizing. Figure 2 In 2025, New Taipei City's Franchise and Concession Review Committee granted permission to firm A to enter the market for cable TV, ending the monopolies of firms B and C. Figure 2 shows the cable television market in New Taipei City.

2. Refer to Figure 2. What is the size of the deadweight loss prior to firm A entering the market and what happens to this deadweight loss after firm A does enter the market? (A) The deadweight loss of area \( D \) is converted to consumer surplus. (B) The deadweight loss of area \( C + D \) is converted to consumer surplus. (C) The deadweight loss of area \( D \) is converted to producer surplus. (D) The total deadweight loss is the area \( D + F \); \( D \) is converted to consumer surplus and \( F \) to producer surplus.

3. Refer to Figure 2. Suppose the local government imposes a $2.50 per month tax on cable companies. What happens to the price charged by the cable company following the imposition of this tax? (A) The price rises from \( P_{\mathrm{M}} \) to \( (P_{\mathrm{M}} + \$2.50) \). (B) The price rises from \( P_{\mathrm{M}} \) but it increases by an amount less than $2.50. (C) The price rises from \( P_{\mathrm{M}} \) but it increases by an amount greater than $2.50 to reflect the monopoly's markup. (D) The price remains at \( P_{\mathrm{M}} \)

4. Refer to Figure 3. What is the monopolist's profit at the profit-maximizing output level? (A) $1,600 (B) $1,000 (C) $850 (D) $600

5. Refer to Figure 3. If this industry was organized as a perfectly competitive industry, what would be the profit-maximizing quantity? (A) 50 (B) 70 (C) 80 (D) 90

1. What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? (A) Price will fall, and the effect on quantity is ambiguous. (B) Price will rise, and the effect on quantity is ambiguous. (C) Quantity will fall, and the effect on price is ambiguous. (D) Quantity will rise, and the effect on price is ambiguous.

2. Choose the right statement(s) about the terms equality and efficiency. (A) Equality refers to uniform distribution of benefits, and efficiency refers to maximizing benefits from scarce resources. (B) Equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. (C) Efficiency refers to how much a society can produce with its resources, while equality refers to how evenly the benefits from using resources are distributed among members of society. (D) Efficiency means that society is getting the most it can from its scarce resources.

3. Choose the right statement(s) about minimum wage. (A) The minimum wage was instituted to ensure workers a middle-class standard of living. (B) The impact of a minimum wage depends on the skill and experience of the worker. (C) Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. (D) A minimum wage would not be binding if the equilibrium wage was above the minimum wage.

4. According to the Coase theorem, private parties can solve the problem of externalities if (A) the cost of bargaining is small. (B) property rights aren't clearly defined. (C) the number of parties involved is sufficiently low. (D) the initial distribution of legal rights favors the person being adversely affected by the externality.

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