Micro CH6

under rent-control, landlords cease to be responsive to tenants' concerns about the quality of the housing because:

with shortages and waiting lists, they have no incentive to maintain and improve their property.

A tax on sellers increases the quantity of the good sold in the market.

False

Buyers and sellers always share the burden of a tax equally.

False

The tax incidence (tax burden) depends on whether the tax is levied on buyers or sellers.

False

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises.

False

A binding minimum wage creates a surplus of labor.

True

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price control.

True

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers.

True

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

True

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

True

Workers with high skills and much experience are not typically affected by the minimum wage.

True

price is the rationing mechanism in a free, competitive market.

True

rent-control laws dictate:

a maximum rent that landlords may charge tenants.

when a tax is levied on sellers of tea:

both sellers and buyers of tea are made worse off

a binding minimum wage tends to:

cause a labor surplus, cause employment, and have the greatest impact in the market for teenage labor.

over time, housing shortages cause by rent control:

increase, because the demand for and supply of housing are more elastic in the long run.

when government imposes a price ceiling or a price floor on a market:

price no longer serves as a rationing device.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the:

quantity demanded of physicals increases, and the quantity supplied of physicals decreases.

a binding price floor will reduce a firm's total revenue:

when demand is elastic