Exam 6: Supply Demand and Government Policies: Part B

A binding price floor causes a shortage in the market.

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

To determine the incidence of a tax,it is necessary to have information on both the elasticity of demand and the elasticity of supply. ​

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Regardless of whether a tax is levied on sellers or buyers,taxes encourage market activity.

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Price ceilings are typically imposed to benefit sellers.

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

The goal of rent control is to help the poor by making housing more affordable.

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

The economy contains many labor markets for different types of workers.

A tax on sellers increases supply.

Price floors are typically imposed to benefit buyers.

One common example of a price ceiling is rent control.

Price ceilings are never binding when set above the equilibrium price.

Lawmakers can decide whether the buyers or the sellers must send a tax to the government,but they cannot legislate the true burden of a tax.

A tax on sellers increases the quantity of the good sold in the market.

Workers determine the supply of labor,and firms determine the demand for labor.

Rent-control laws dictate a minimum rent that landlords may charge tenants.