HW 7

Which of the following describes a difference between a price support and a price​ ceiling?

A price support attempts to raise the price above the equilibrium price while a price ceiling does not.

In a housing market with a rent ceiling below the equilibrium​ rent, apartment seekers spend more time searching for an apartment than they would in a housing market without a rent ceiling. Why does this difference​ exist?

In the market with the rent​ ceiling, the quantity of housing demanded is greater than quantity supplied at the ceiling price.

Who loses and who gains from the minimum​ wage?

Losers are all firms and some​ workers, while gainers are other workers.

Which of the following is​ true? i. A price ceiling set above the equilibrium price has no effects. ii. A price ceiling set below the equilibrium price creates a surplus. iii. A price floor set above the equilibrium price has no effects.

Only i

A price ceiling is

a maximum legal price.

Suppose the current equilibrium wage rate for lifeguards in Houston is​ $7.85 an hour. A minimum wage law that creates a price floor of​ $8.50 an hour leads to

a surplus of lifeguards in Houston.

Rent ceilings

benefit renters living in apartments with the rent ceilings

In a market with a rent ceiling set below the equilibrium​ rent, the producer and consumer surplus

both decrease but generally not to zero.

A rent ceiling is a regulation that makes it illegal to​ _______.

charge a rent higher than a specified level

Both production quotas and a price floor can

create a deadweight loss.

A price ceiling imposed below the equilibrium price​ ______.

creates a black market in which the price might equal or exceed the equilibrium price

A minimum wage that is above the equilibrium wage rate

creates a deadweight loss.

What is the effect of a minimum wage set above the equilibrium wage rate in the market for​ low-skilled workers? A minimum wage set above the equilibrium wage rate for​ low-skilled workers​ _______.

creates unemployment among​ low-skilled workers

A minimum wage set above the equilibrium wage will​ ________ the quantity of labor demanded and​ ________ the quantity of labor supplied.

decrease; increase

A minimum wage

decreases the​ firms' surplus because fewer workers are hired at the higher wage.

When a price ceiling below the equilibrium price is imposed on a​ good, production of the good

decreases.

A rent ceiling creates a deadweight loss

if it is set below the equilibrium rent.

Which of the following decrease the deadweight loss from a rent ceiling set below the equilibrium​ rent? i. lowering the ceiling ii. dedicating more resources to enforcement of the ceiling iii. raising the ceiling

iii only

Rent ceilings

increase search activity.

A rent ceiling in a housing market

increases the time people spend searching for housing.

A production quota set below the market equilibrium quantity​ _______.

increases the​ price, increases producer​ surplus, and is inefficient

A minimum wage set above the market equilibrium wage rate​ ______.

increases unemployment and decreases employment

A price ceiling is​ ______ if it is set​ ______ the market equilibrium price.

inefficient and​ unfair; below

A minimum wage is​ ______.

inefficient if job search increases and total surplus decreases

A price ceiling

is the maximum price that can legally be charged.

Which of the following is​ true? i. A price ceiling is inefficient but fair. ii. A price floor is inefficient and unfair. iii. A production quota increases the quantity produced.

only ii

A regulation that sets the highest price at which it is legal to trade a good is a

price ceiling.

What is a minimum​ age? A minimum wage is a​ _______ applied to labor markets.

price floor

If the government imposes an effective​ ________, output decreases and​ ________ increases.

production​ quota; producer surplus

A price floor influences the outcome of a market if it is​ ______.

set above the equilibrium price

A rent ceiling creates a​ ______ of housing if it​ ______ the equilibrium rent.

shortage; is less than

People who benefit from a rent ceiling include

tenants who have a rent−controlled apartment.

What determines the number of hours of labor employed when an effective minimum wage is introduced into the labor​ market? When an effective minimum wage is​ introduced, the number of hours of labor employed is determined by​ _______ and​ _______.

the demand for​ labor; the minimum wage

What are the characteristics of a black market that emerges as the result of a price​ ceiling? A black market that emerges as the result of a price ceiling is an illegal market in which​ _______.

the price exceeds the legally imposed price ceiling

What is the opportunity cost of a good when the government imposes a price ceiling on​ it? When the government imposes a price ceiling on a​ good, the opportunity cost of the good is equal to​ _______.

the price of the good plus the value of the search time spent finding the good

A price ceiling in the market for gasoline that is below the equilibrium price will lead to

the quantity demanded of gasoline exceeding the quantity supplied.

The people who immediately benefit from a minimum wage are

the workers who retain their jobs after enactment of the minimum wage.

If a price ceiling is set above the equilibrium​ price, then

there will be neither a shortage nor a surplus of the good.

Is the outcome delivered by a minimum wage fair by the​ fair-results view? Is it fair by the​ fair-rules view? A minimum wage delivers an​ outcome, which in the​ fair-results view is​ _______ and in the​ fair-rules view is​ _______.

unfair; unfair

If a price ceiling is introduced in the market for milk below the market equilibrium​ price, then the producer surplus made by dairy farmers​ ________.

will decrease

Following a major natural disaster that destroys​ housing, a rent ceiling​ ________ be an effective policy to increase the quantity of more affordable housing for displaced residents because it would​ ________.

would​ not; discourage rebuilding and result in a shortage

If the minimum wage is above the equilibrium wage​ rate, then an increase in the minimum wage​ ________ employment and​ ________ unemployment.

​decreases; increases

Assume a market is producing efficiently. Which type of government intervention in this market might create a deadweight​ loss? i. a price ceiling ii. a price floor iii. a production quota

​i, ii, and iii