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  3. Liberty ECON 213 InQuizitive Ch. 6 Answers Complete solutions

Liberty ECON 213 InQuizitive Ch. 6 Answers Complete solutions

 

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Identify some of the ways businesses will adapt to a minimum wage in the long run.

Price controls generally serve a positive economic function, as they compensate for the market’s inability to regulate wages in certain sectors of the economy.

Rent control is an ineffective way for local city governments to provide affordable housing to low-income residents.

Unlike price ceilings, price floors lead to very positive effects when properly implemented.

Suppose the government enacts a price floor on milk, which leads to a surplus in the market. How will the government then attempt to equalize supply and demand?

Fill in the blanks to complete the passage regarding the development of illegal markets in response to price ceilings.

If minimum wage laws are generally nonbinding and do not affect the equilibrium wage, then what is the purpose of implementing a minimum wage? It holds out the promise for low-income voters of a betterment in their situation. It leads employers to create better working conditions out of fear that a binding law may soon be imposed. It works to reduce the existing unemployment rate.

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Suppose this graph shows the market for milk in California. If the California legislature imposes a price floor of $6 per gallon of milk, what price would the black market set for each gallon of milk illegally sold to consumers?

As illustrated here, a binding price ceiling causes a short-run shortage, which then worsens into a long-run shortage. What, in this particular scenario, happens to the black-market price between the short run and the long run? The black-market price stays more or less the same in the long run as in the short run. The black-market price goes down in the long run. The black-market price goes up in the long run, due to increased elasticity of supply.

Fill in the blanks to complete the passage regarding the government’s attempt to reduce a crop surplus that results from price controls.

The government’s attempt to – additional demand for agricultural products leads to complex and unintended consequences. The government will often – surplus agricultural production and sell it at a – price to developing countries rather than letting crops go to waste. People in these countries can then purchase the excess output from developed nations rather than goods from –.

What are some of the unintended effects of rent control? Rent-control laws incentivize the development of upscale housing instead of low-income units. Rent control decreases landlords’ profits and subsequently lower their incentive to invest in property upkeep. More low-income residents are able to find more housing in rent-controlled cities in the long term. Rent-controlled units have a high ownership turnover rate.

Let’s assume that a state increases its minimum wage from $8 to $11.35, while the equilibrium wage remains at a constant $10. Click on the area of the graph representing the unemployment that sets in when the minimum wage is raised.

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