Cracking the AP Economics Macro & Micro Exams, 2018 Edition by Princeton Review

Author:Princeton Review
Language: eng
Format: epub
Publisher: Random House Children's Books
Published: 2017-09-26T04:00:00+00:00

4. A The best approach is to draw the supply and demand for labor (see the figure below). As the minimum wage increases from W to W´, the wages rise, but the quantity of labor needed drops. Therefore, increasing the minimum wage would be beneficial for some workers (for those who are employed at the higher wage), but detrimental for others (those who were employed at the lower wage, but are no longer employed). The answer is (A).

5. D Before trade, the price and quantity of cotton would be P and Q respectively (as shown in the figure below). As the world price is below the domestic equilibrium price, the domestic price would fall to P´ and the equilibrium quantity would rise to Q´. As domestic producers would not be able to produce the higher quantities at the lower price, the United States would become a net importer of cotton. The answer is (D).

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