ECON101 Chapter Notes - Chapter 6: Price Ceiling, Tax Incidence, Economic Equilibrium

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OC2146671

21 Oct 2017

School

University of Waterloo

Department

Economics

Course

ECON101

Professor

wokiakumase

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ECON101 Full Course Notes

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Intervenes to make a good more affordable: price ceiling attempts to prevent the price from regulating the quantities demanded and supplied, force of the law and market forces are in conflict. Inefficiency of a rent ceiling: underproduction of housing services, marginal social benefit exceeds the marginal social cost and a deadweight loss shrinks the consumer surplus and producer surplus, quantity of housing supplied is less than the efficient quantity. Fair-rules view: anything that blocks voluntary exchange is unfair: rent ceilings are unfair since landlords are getting less than what they want. Supply curve measures the marginal social cost of labour to workers, cost is leisure foregone. Income tax, social security is deducted from earnings, hst and gst are added to bills. Taxes: employers pay social security taxes such as employment insurance tax. Sellers respond to this price: tax acts like a wedge between price that buyers pau and price sellers receive.

Related Questions

1 . Effects of rent control

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price.

When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply.

The future supply of rental housing units increases.

The quantity of available rental housing units falls.

The quality of rental housing units falls.

Nonprice methods of rationing emerge.

blackcoyote423

When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply.

The future supply of rental housing units increases.

Efficient use of housing space results.

Nonprice methods of rationing emerge.

The quantity of available rental housing units falls.

Question 1

The shortage in apartments causes by rent control is worse...

		In the long-run, because the long-run supply is more elastic.
		In the long-run, because the long-run supply is less elastic.
		In the short-run, because the short-run supply is more elastic.
		In the short-run, because the short-run supply is less elastic.

2 points

Question 2

Airline regulation of the 1970s produced a similar result to which of the following government interventions?

		Communism
		Rent control laws
		The Affordable Care Act
		Minimum wage laws

2 points

Question 3

What is a price floor?

		A maximum price allowed by law.
		A minimum price allowed by law.
		A maximum price consumers are willing to pay.
		A minimum price consumers are willing to pay.

2 points

Question 4

In 1938, Congress set the first minimum wage at $0.25 per hour. While this was a modest price floor for the country, it was a very large increase for what US territory which was not exempt from the law?

		Arizona
		Puerto Rico
		Cuba
		Hawaii

2 points

Question 5

Which of the following is a possible effect of a price ceiling?

		A surplus of the good.
		Increases in product quality.
		Increased gains from trade.
		People will waste time in lines waiting to purchase the good.

2 points

Question 6

Which of the following is a possible effect of a price floor?

		Decreases in product quality.
		The quantity supplied exceeds the quantity demanded.
		Increased gains from trade.
		A shortage of the good.

2 points

Question 7

Which of the following is a possible effect of a price ceiling?

		Increased gains from trade.
		Increases in product quality.
		A surplus of the good.
		The quantity demanded exceeds the quantity supplied.

ECON101 Chapter Notes - Chapter 6: Price Ceiling, Tax Incidence, Economic Equilibrium

ECON101 Full Course Notes

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