Chapter 6 Econ study guide
Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
with shortages and waiting list's they have no incentive to maintain or improve their property
which of the following is a correct statement about the labor market?
workers determine the supply of labor and firms determine the demand for labor
The US congress first instituted a minimum wage in
1938
as of 1999, the U.S. minimum wage according to federal law was
5.15 per hour
Which is the most accurate statement about taxes and government
All government rely on taxes to raise revenue for public purposes
which of the following statements about rent control in NYC is accurate?
Many well-to-do people live in rent controlled apartments
which of the following is the most accurate statement about minimum wage laws?
Some states have legislation which establishes a higher minimum wage than federal law
Rent control is
a common example of a price ceiling.
Economists generally believe that rent control is
a highly inefficient way to help the poor raise their standard of living.
The minimum wage was instituted in order to ensure workers
a minimally accurate standard of living
FICA is an example of
a payroll tax
A binding price ceiling in the computer market will cause
a shortage of computers
Which of the following statements is the most correct about tax burdens
a tax burden falls heavily on the side of the market that is inelastic
water shortages caused by drought can be lessened by
allowing price to equate the demand for water with the supply of water
California's drought-emergency water bank
allows farmers to lease water during dry spells
in general, the advocates of minimum wage
believe that the adverse effects are small, and generally a higher minimum wage makes the poor better off
Under rent control, bribery is a mechanism to
bring the total price of an apartment (including the bribe) closer to the equilibrium price.
What is true about the burden of tax imposed on popcorn
buyers and sellers share the burden of the tax
which is the most correct statement about the burden of a tax imposed on buyers of popcorn?
buyers and sellers share the burden of the tax
If a tax is imposed on a market with inelastic demand and elastic supply
buyers will bear the most burden of the tax
price controls
can generate inequities of their own
a tax on the buyers of popcorn will
cause the price the buyer pays to rise and price the seller receives to fall
in the end, tax incidence
depends on the forces of supply and demand.
the typical study on the effect of the minimum wage on teenage employment finds that a 10 percent increse in minimum wage
depresses teenage employment 1-3 percent
a binding price ceiling will make it necessary to
develop a way of rationing the product, because there will be a ceiling
Congress intended that
half the FICA tax be paid by workers, and half be paid by firms.
a price ceiling that is not binding
has no effect
a tax on the buyers of popcorn will
increase the equilibrium price and increase the equilibrium quantity
a tax on the sellers of popcorn will
increase the equilibrium price and reduce the equilibrium quantity
Rationing by long lines is
is inefficient because it waste's buyers' time
The initial effect on the tax on the buyers of a good
is on the demand for that good
The initial impact of a tax on the sellers of a product
is on the supply of the product
A price floor is binding if
it is higher than the equilibrium price
A tax on the sellers of popcorn
leads sellers to supply a smaller quanitity at every price
The equilibrium wages of teenagers tend to be
low because teenagers are among the least skilled and least experienced workers.
the burden on luxury tax falls on
more on the middle class than on the rich.
Revenue from the FICA tax s used to
pay for SS and medicare
the key feature of a payroll tax is that it
places a wedge between the wage that firms pay and the wage that worker's receive
A legal maximum at which a price can be sold at is a
price ceiling
which of the following is the most correct statement about price control
price controls often hurts those they are designed to help
The minimum wage is an example of
price floor
a legal minimum on the price at which a good can be sold
price floor
which of the following is NOT a function of prices in a market system?
prices make equitable distribution of goods and services among consumers possible
Unlike minimum wage laws, wage subsidies
raise the living standards of the working poor without creating unemployment.
a tax on the sellers of popcorn will
reduce the size of the popcorn market.
A tax on the buyers of popcrn
reduces the size of the popcorn market
if tax is imposed on a market with elastic demand and inelastic supply
sellers will bear the most burden of the tax
When analyzing the economic effects of governing policies
supply and demand are the most useful tools of alaysis
A binding price floor causes
surplus
The term tax incidence refers to
the division of the tax burden on buyers and sellers
If a price ceiling is not binding, then
the equilibrium price is below the price ceiling
if a price ceiling is a binding constraint on the market, then
the equilibrium price must be above the price ceiling
Long lines at gas stations in the U.S. in the 1970s were primarily a result of
the fact that the us government had imposed a price ceiling on gasoline
minimum wage laws dictate
the lowest price employers may pay for labor
the minimum wage has the greatest effect one
the market for teenage labor
a price floor is not binding if
the price floor is lower than the equilibrium market price
a tax on the sellers of popcorn will cause
the price the buyers pay to rise and the effective price the sellers receive to fall
if the minimum wage is above the equillibrium wage
the quantity demanded for labor will be less than the quantity supplied
When OPEC raised the price of crude oil in the 1970s, it caused the what?
the supply of gasoline to decrease
When a payroll tax is enacted,
the wage received by workers falls and the wage paid by firms rises
Workers with high skills and much experience are not affected by the minimum wage because
their equilibrium wages are well above the minimum wage
policymakers are led to control prices because
they view the market's outcome as unfair
in 1990, congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. the goal of the tax was
to raise revenue from rich people
Price controls are
usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers
The earned income tax credit is an example of
wage subsidies