chapter 6-- eco 2023

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this? a. He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city. b. He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. c. He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. d. He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city.

a. He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

A tax imposed on the buyers of a good will a. raise the price buyers pay and lower the effective price sellers receive. b. lower the price buyers pay and raise the effective price sellers receive. c. raise both the price buyers pay and the effective price sellers receive. d. lower both the price buyers pay and the effective price sellers receive.

a. raise the price buyers pay and lower the effective price sellers receive.

A minimum wage that is set above a market's equilibrium wage will result in an excess a. supply of labor, that is, unemployment. b. demand for labor, that is, unemployment. c. demand for labor, that is, a shortage of workers. d. supply of labor, that is, a shortage of workers.

a. supply of labor, that is, unemployment.

As rationing mechanisms, prices a. are inefficient, but long lines are efficient. b. are efficient, but long lines are inefficient. c. and long lines are efficient. d. and long lines are inefficient.

b. are efficient, but long lines are inefficient.

Under rent control, bribery is a mechanism to a. allocate housing to the poorest individuals in the market. b. bring the total price of an apartment (including the bribe) closer to the equilibrium price. c. allocate housing to the most deserving tenants. d. force the total price of an apartment (including the bribe) to be less than the market price.

b. bring the total price of an apartment (including the bribe) closer to the equilibrium price.

A tax imposed on the sellers of a good will lower the a. price paid by buyers and raise the equilibrium quantity. b. effective price received by sellers and lower the equilibrium quantity. c. price paid by buyers and lower the equilibrium quantity. d. effective price received by sellers and raise the equilibrium quantity.

b. effective price received by sellers and lower the equilibrium quantity.

The goal of rent control is to a. facilitate controlled economic experiments in urban areas. b. help the poor by making housing more affordable. c. help the poor by assuring them an adequate supply of apartments. d. help landlords by assuring them a low vacancy rate for their apartments.

b. help the poor by making housing more affordable.

If a price ceiling is not binding, then a. the equilibrium price is above the price ceiling. b. the equilibrium price is below the price ceiling. c. it has no legal enforcement mechanism. d. None of the above is correct because all price ceilings must be binding.

b. the equilibrium price is below the price ceiling.

If a binding price ceiling is imposed on the baby formula market, then a. the quantity of baby formula demanded will increase. b. the quantity of baby formula supplied will decrease. c. a shortage of baby formula will develop. d. All of the above are correct.

d. All of the above are correct.