ECON-E 201 Lecture Notes - Lecture 15: Deadweight Loss, Tax Incidence, Living Wage

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plumhorse517

12 Jan 2017

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Department

Economics

Course

ECON-E 201

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Graf Paul

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ECON-E 201 Full Course Notes

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Econ-e201 lecture 15 notes- markets: price ceilings/floors, taxes, and subsidies. Price floors and labor markets: minimum wage: ex. More workers enter, less jobs at wage. If resources used in job search activity, workers" and firms" surplus decrease to give deadweight loss: minimum wage leads to inefficient use of resources. Quantity of labor employed < efficient quantity; deadweight loss present: living wage- hourly wage rate that enables a person working a 40-hour week to rent adequate housing for not more than 30% of the amount earned. Laws already operate in many large us cities. Taxes: everything we earn, most things we buy are taxed. You pay: income, social security & medicare, sales taxes. Your employer: social security & medicare, corporate, unemployment taxes. Not obvious who pays a tax, lawmakers don"t decide who pays: tax incidence. Tax incidence- division of burden of tax between buyer and seller.

Related Questions

1.Under rent controls, Select one:

a. the quantity supplied of rental units is greater than it would be under freely competitive markets.

b. there is a shortage of rental units.

c. there is less government involvement in rental markets overall because there is a better supply of low-income housing.

d. all renters are better off than under freely competitive markets.

2.Which of the following is NOT a function of rental prices?

Select one:

a. To stimulate the construction of new housing

b. To allocate existing scarce housing among different people

c. To provide housing to individuals below market value

d. To ration the existing housing stock

3. price floors are designed to

a. establish a minimum allowable price

b. create shortages when none existed before

c. none of these

d. allow free market prices to be achieved

4.what are the effects of an increase in the minimum wage? who would be most affected?

5. the minimum wage laws seek to

a. help teenagers find work

b. assure that all workers are paid the same wage rate

c. assure a minimum standard of payment for work

d. penalize employers that are not complying with labor laws

6. A black market s a market in which

a. goods are sold at outlet prices

b. sales taxes are effectively doubled

c. sales take place exclusively at outlet prices.

d. goods are traded at price above their legal maximum prices

viridianalpaca10

1.) An excise tax on a good typically reduces the net price received by the seller. (TRUE/FALSE)

2.) The burden of an excise tax on gasoline falls entirely on consumers of gasoline. (TRUE/FALSE)

3.) Rent controls are one of the few examples of a price floor in market economies. (TRUE/FALSE)

4.) Imposing a price ceiling below the equilibrium price of a good often leads to_____.

A) A greater supply of the good

B) A black market for the good

C) A rightward shift of the supply curve for the good.

D) A leftward shift of the demand curve for the good.

E) All of these

5.) Which of the following is true of price floors and ceilings?

A) Lead to the same price and quantity as in competitive market.

B) Lead to technical efficiency

C) Cause the demand curve to shift left

D) Usually result from government intervention

E) Cause the supply curve to shift right.

6.) Price ceilings often lead to black markets. (TRUE/FALSE)

7.) When minimum wage is above the equilibrium wage what occurs?

A) There will be a shortage of labor

B) There will be no effect on the number of people employed

C) There will be an increase in unemployment rate

D) There will be a decrease in unemployment rate

8.) An excise tax on a good typically reduces the price paid by the consumer (TRUE/FALSE)

9.) If a price ceiling is below the equilibrium price is imposed on a market, it will cause the quantity demanded to rise and the quantity supplied to fall. (TRUE/FALSE)

10.) Price floors often lead to black markets. (TRUE/FALSE)

11.) If an excise tax is imposed on restaurant meals what occurs?

A) Fewer meals will be produced and sold

B) More meals will be produced and sold

C) Market price of the meals will fall

D) Government tax revenue will fall.

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ECON-E 201 Lecture Notes - Lecture 15: Deadweight Loss, Tax Incidence, Living Wage

ECON-E 201 Full Course Notes

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