Taxes
example of a price ceiling or price cap?
A regulation requires cable service to be provided for no more than $30 a month.
rent ceiling
Bluestone Properties is permitted to charge a rent of $2,350 for 2-bedroom apartments that would rent for $2,500 in an unregulated market.
price floor ex:
The government guarantees that potato farmers will receive at least $50 a ton.
With an effective rent ceiling, housing is allocated by ______. Search activity ______.
a method other than by price; increases = black market rise
When a minimum wage is in place, scarce jobs are allocated by _______.
a method other than market price, such as personal characteristics, first-come first-served, or discrimination
With a price ceiling on gasoline set below the equilibrium price, total surplus _______ and deadweight loss _______.
decreases; increases
A minimum wage is a price ______ in the labor market. A minimum wage that is set ______ the equilibrium wage has no effect.
floor; below
The greater the elasticity of demand, the ______ is the amount of the tax paid by sellers & DWL and the ______ is the decrease in the equilibrium quantity.
greater; greater
black market transaction? Annie rents an apartment _____.
in rent-controlled city by paying $1,000 for an extra set of keys A black market is an illegal market that operates alongside a government-regulated market. The fact that Annie rents an apartment in a rent-controlled city by paying $1,000 for an extra set of keys, implies that the transaction in a government-regulated market is illegal. It is an example of a black market transaction.
A minimum wage creates an inefficient allocation of labor resources because at the quantity of employment ______.
marginal social benefit exceeds marginal social cost
An effective rent ceiling creates an inefficient outcome because at the rent ceiling ______.
marginal social benefit exceeds marginal social cost
When a price ceiling on gasoline is set below the market equilibrium price, _____ consumers are better off and _____ producers are worse off.
some; all
A tax is inefficient for all of the following reasons except _______.
the burden of the tax falls entirely on buyers, so buyers purchase a smaller quantity true; -the tax drives a wedge between the price paid by buyers and the price received by sellers -with a tax, the market produces less than the equilibrium quantity -with a tax, the marginal social benefit of the last unit sold to be greater than the marginal social cost of the last unit produced
An effective rent ceiling is ______ by the fair results view and ______ by the fair rules view.
unfair; unfair rent ceiling is below the equilibrium rent, the quantity available is the quantity supplied. The quantity demanded exceeds the quantity supplied and a shortage occurs. But when a rent ceiling is set above the equilibrium rent, the rent is the equilibrium rent. The quantity demanded equals the quantity supplied. A surplus does not occur.
