Econ 4

Suppose the federal government reduces an effective price floor toward the equilibrium price but not below it. What will happen to the deadweight loss and total surplus? a. The deadweight loss willdecrease.increase.remain unchanged.become negative. b. The total surplus will increase. become negative. remain unchanged. decrease.

a. decrease b. increase

Why does the quantity of public college education determined in a free market (without government intervention) represent a market failure? Because the market‑determined equilibrium quantity would be too little, making it harder for colleges to operate. Because the market‑determined equilibrium quantity would be less than the quantity most people view as desirable. Because the market‑determined equilibrium quantity causes a shortage. The statement is incorrect. The market‑determined equilibrium does not represent a market failure.

Because the market‑determined equilibrium quantity would be less than the quantity most people view as desirable.

Government and employer subsidies to reduce the price of health insurance have important benefits to the individual in terms of improved health. In addition, society overall can benefit from higher levels of health care coverage. Which of the following are external benefits that may result from increased health care coverage?Less waiting for major treatments.Reduced usage of expensive emergency room visits.Increased cost, as people live longer.Increased productivity for employers, as fewer sick days are taken by workers.

Less waiting for major treatments. Reduced usage of expensive emergency room visits. Increased productivity for employers, as fewer sick days are taken by workers.

The U.S. Department of Labor reports that of the roughly 150 million people employed, just over half are paid hourly. Less than 5% of the people employed earn the minimum wage or less; 95% of wage earners earn more. Teenagers living at home make up 25% of those earning the minimum wage or less. All of the following are reasons why the minimum wage remains an important issue except one. The exception is: Many people share the opinion that reducing income inequality and increasing wages among lower-income earners as a whole benefits society. The minimum wage offers the possibility of reducing income inequality by raising the wages of low-income workers. If the minimum wage is set above the equilibrium wage a surplus of labor may occur, resulting in higher unemployment. People do not care about the minimum wage because it only affects teenagers and individuals not willing to increase their skill set.

People do not care about the minimum wage because it only affects teenagers and individuals not willing to increase their skill set.

In cities around the country, the government provides assistance to families with low incomes to rent apartments at prices capped by the U.S. Department of Housing and Urban Development (HUD), essentially setting a price ceiling on apartments. The designated apartments tend to rent quickly, and tenants are less likely to move once they find an apartment. Assume the price ceiling is set below market equilibrium and no government subsidies are offered to landlords. What are the most likely outcomes in terms of availability of rent-controlled apartments and ongoing maintenance of rent‑controlled apartments?The price ceiling will cause a shortage of rent‑controlled apartments and the rent‑controlled apartments will be less well maintained than apartments without rent controls.The price ceiling will cause a surplus of rent‑controlled apartments and the rent‑controlled apartments will be less well maintained than apartments without rent controls.The price ceiling will cause a surplus of rent‑controlled apartments and the rent‑controlled apartments will be better maintained than apartments without rent controls.The price ceiling will cause a shortage of rent‑controlled apartments and the rent-controlled apartments will be better maintained than apartments without rent controls.

The price ceiling will cause a shortage of rent‑controlled apartments and the rent‑controlled apartments will be less well maintained than apartments without rent controls.

Luigi's is the only pizzeria in a small town in northern Alaska. It is constantly busy, but there is never a waiting time for a table. One of Luigi's friends suggests that he would earn much more money if he raised his menu prices by 25%, because no one is likely to open a new pizzeria in the near future. If Luigi follows his friend's advice, what would happen to consumer surplus, producer surplus, and efficiency in this market?

a. decrease b. increase c. falls due to fewer pizzas being bought and sold.

What happens to consumer surplus in the tire market when a new technology lowers the cost of tire production? The lower price meansconsumer surplus decreases.consumer surplus increases.the new consumer surplus is indeterminate.consumer surplus remains the same.

consumer surplus increases.

In 2018, Governor Baker of Massachusetts signed a bill to raise the state's minimum wage to $15 per hour by 2023 ("Massachusetts governor signs bill raising minimum wage to $15," The Hill, June 29, 2018). Proponents argue that this policy helps the working poor, who hold full‑time jobs, yet cannot pull their families out of poverty. Opponents argue that the policy harms the labor market. Identify each argument that proponents of a higher minimum wage might make.government revenues will rise because workers are earning more taxable incomethere will be less poverty and thus less dependence on federal and state income assistance programsfirms will hire more workers, lowering unemploymentcrime tends to fall when poverty falls, providing external benefits to society

government revenues will rise because workers are earning more taxable income there will be less poverty and thus less dependence on federal and state income assistance programs crime tends to fall when poverty falls, providing external benefits to society

An increasing number of charities have turned to online auctions as a way to raise money by selling unique experiences donated by celebrities, such as a meet-and-greet with a celebrity before a concert or a walk-on role on a television show. Why would the use of auctions lead to a better outcome for the charity as opposed to just setting a fixed price? The outcome is better because more people would actually benefit from a fixed price than a price that is set through an auction. the demand for the good or service will be lower if the price is fixed. in an auction consumers reveal the highest price they are willing to pay, which may be lower than the fixed price. in an auction consumers reveal the highest price they are willing to pay, which may be higher than the fixed price.

in an auction consumers reveal the highest price they are willing to pay, which may be higher than the fixed price.

Why does an effective price ceiling appear below the equilibrium rather than above it? A price ceilingis only effective when it is high enough to restrict decreases in the market price.is only effective when it is low enough to restrict increases in the market price.and its effectiveness are not at all associated with equilibrium.is only effective when it is equal to the market equilibrium price.

is only effective when it is low enough to restrict increases in the market price.

Why does deadweight loss occur at a price below equilibrium even though some consumers benefit? The deadweight loss occurs because a surplus occurs at a price below equilibrium, allowing consumers to benefit from a lower price. some trades between willing sellers and buyers are missed because the price is too low. consumers purchase more of the good at a price below equilibrium. a higher price is charged when a shortage occurs, so consumers never benefit.

some trades between willing sellers and buyers are missed because the price is too low.