Chapter 6 Econ study guide

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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


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