Exam 6: Supply Demand and Government Policies: Part B

The rationing mechanisms that develop under binding price floors are usually efficient.

Because the supply and demand of housing are inelastic in the short run,the initial shortage caused by rent control is large.

The United States is the only country in the world with minimum-wage laws.

To be binding,a price floor must be set above the equilibrium price.

Figure 6-36 -Refer to Figure 6-36.If the government places a $2 tax in the market,the seller bears $1 of the tax burden.

When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.