ECON 2106 CHAPTER 7

one result of the minimum wage is

a black market for labor that pays less than the minimum wage

an efficient allocation of labor occurs when the

a marginal cost to workers is equal to the marginal benefit to firms

in order to have an impact, a ___ must be set below the equilibrium price and when this occurs ____

a price ceiling ; producer surplus decreases

suppose the equilibrium rent in Denver is 1050. a rent ceiling of 755 per month leads to

a shortage of apartments in Denver

a rent ceiling on housing creates a problem of allocating the available housing units because

a shortage of apartments occurs

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

when a minimum wage is introduced _________ the equilibrium wage rate , the quantity of labor demanded _________ and the quantity of labor supplied ____ thus creating unemployment

above decreases ; increases

to be effective in raising peoples wages , a minimum wage must be set

above the equilibrium wage rate

the fair results view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

benefits only those workers who are able to find and keep job

an effective price supports ____ producers and ___ deadweight loss

benefits, creates

to keep the price at the level set by a price support , the government must

buy some of the good

a price floor

changes the price and quantity if it is set above the equilibrium price

if a rent ceiling is below the equilibrium rent , some allocation scheme must be used. the allocation methods include all of the following EXCEPT

charging the equilibrium rent

rent controls

create deadweight loss and benefit people who live in rent controlled apartments

a minimum wage that is above the equilibrium wage rate

creates a deadweight loss

in a competitive labor market, a minimum wage law set above the equilibrium wage rate

creates a surplus of labor

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

decreased the firms surplus because fewer workers are hired at the higher wage

a price support set above the equilibrium price

decreases consumer surplus

a minimum wage increases unemployment by

decreasing the quantity of labor demanded

which of the following decrease the deadweight loss from a rent ceiling set below the equilibrium rent

dedicating more resources to enforcement of the ceiling

in a market with a price support set above the equilibrium price

farmers gain

a rent ceiling creates a deadweight loss

if it is set below the equilibrium rent

rent ceilings

increase search activity

when a price support is set above the equilibrium price, producers ___ the quantity supplied ad consumers ____ the quantity demanded

increase, decrease

a rent ceiling below the equilibrium rent

increased the quantity of housing supplied

setting a price support in the market for sugar beets above equilibrium price ___ the quantity produced and _____ the quantity bought by customers

increases ; decreases

when a rent ceiling is ____ , consumer surplus and producer surplus shrink , a deadweight loss ___, and resources are lost in search activity and evading the rent ceiling law.

inefficient ; arises

a price floor is ____ and _____

inefficient and unfair

when a rent ceiling below the equilibrium rent is put in place, the outcome I

inefficient because marginal benefit is greater than marginal cost

when a minimum wage is ___, the firms surplus and workers surplus shrink , a deadweight loss ___, a resources are lot in job search

inefficient, arises

the shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ____ and the supply of housing is

inelastic ; inelastic

if a minimum wage is introduced that is above the equilibrium wage rate

job search activity increases

a rent ceiling set below the equilibrium rent decreases the quantity of housing supplied because

landlords of previously barely profitable apartments refuse to rent thm

a price ceiling in a market for fuel oil is below the equilibrium price will

lead to the quantity demanded of fuel oil exceeding the quantity supplied

who loses and who gains from the minimum wage

losers are all firms and some workers , while gainers are other workers

import restriction in advanced economics deny developing economies access to the food market of the advanced economies. The result is ____ price and ______ farm production in the developing economies

lower, smaller

in the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. if the government then impose a price support of 20 per ton

marginal cost exceeds marginal benefit

example of price floor ?

minimum wage law

is minimum wage fair ?

no because workers who lose their jobs are made worse off

suppose the equilibrium rent in Boston is 1500. A rent ceiling of 1600 per month leads to

no change in the Boston apartment market

suppose the current equilibrium wage rate for housekeepers is 8.60 per hour. An increase in the minimum wage to 7.50 per hour leads to

no change in the market for housekeepers

suppose the current equilibrium wage rate for landscrapers is 6.65 in Little rock, 7.50 in St. Louis and 9.05 in Raleigh. An increase in the minimum wage to 7.50 per hour results in unemployment of landscapers in

only little rock

with a price support program, who receives a subsidy

only producers

which of the following is true

price support is inefficient , and a price floor is set above the equilibrium price creates a surplus

what can create deadweight loss

price supports , price floor , price ceiling

suppose the equilibrium wage rate for apricot pickers is 7.00 per hour ad t that wage rate the equilibrium quantity o apricot pickers employed is 14000. if the minimum wage is set at 7.50 per hous , then the

quantity of apricot pickers employed decreases

suppose the equilibrium wage rate for apriocot pickers is 9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000 if the minimum wage is set at 7.50 per hour

quantity of apricot pickers employed does not change

black markets can occur when price ceilings are imposed in a market. which of the following explains why sellers participate in a black market

sellers are able to sell the product for a higher than legal price

if a rent ceiling is set below the equilibrium price , thus creating a _____, housing may be allocated by increasing search activity or creating a

shortage ; black market

the shortage created by a price ceiling will likely be

smaller if the good is a necessity

when a rent ceiling law is passed in a city which of the following occurs

some landlord and renters use methods such as key money to get around the rent ceiling law

a back market for housing exits because of a rent ceiling . the rent for housing in the black market is

somewhere between the ceiling rent and the maximum rent tenant is willing to pay

the methods that governments use to support farmers vary, but they almost always involve some or all the following methods EXCEPT

tax farmers

people who benefit from a rent ceiling include

tenants who have a rent controlled apartment

a price floor is

the lowest legal price at which a good or service can be traded

in the market for cotton , suppose the equillibrum price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of 20 per ton

the market price increases

a price ceiling is

the maximum price than can legally be charged

suppose the city of Chicago imposes a rent control program that fixes rents at 400 below th equilibrium rent. With this plan

the quantity of apartments demanded will increase

suppose the equilibrium price of a gallon of milk is 4 dollars. if the government imposes a price floor of $5 per gallon of milk

the quantity supplied of milk exceeds the quantity demand

assuming that the rent ceiling is strictly enforced sot hat there is no black market , which of the following statements about a housing market with a rent ceiling set below the equilibrium rent is correct

the rent ceiling creates a deadweight loss

the people who immediately benefit from a minimum wage are

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

with rent ceiling set below the equilibrium rent

there is a shortage of apartments.

if a price ceiling is set above the equilibrium price then

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

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 distroys 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 shortage

the minimum wage is set above the equilibrium wage rate. does the minimum wage create inefficiency

yes