Microeconomics: Market Equilibrium and Government Actions

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What is the result of a rent ceiling set below the equilibrium rent?

Increased housing supply

Increased housing demand

A housing shortage (correct)

No effect on the housing market

What happens when a price ceiling is set above the equilibrium price?

A surplus of the good is created

The market works as if there were no ceiling (correct)

The price of the good is fixed at the ceiling

A shortage of the good is created

What is another name for a price ceiling in a housing market?

Price floor

Price cap

Rent floor

Rent ceiling (correct)

What is the effect of a rent ceiling on the search activity in the housing market?

Increased search activity Signup and view all the answers

At the rent ceiling, what is the relationship between the quantity of housing demanded and the quantity supplied?

The quantity of housing demanded exceeds the quantity supplied Signup and view all the answers

What is the consequence of a rent ceiling set below the equilibrium rent, in terms of the black market?

The black market is created Signup and view all the answers

What happens to the quantity of labor employed when a minimum wage is set above the equilibrium wage?

It decreases Signup and view all the answers

What is the result of a minimum wage being set above the equilibrium wage in a labor market?

Unemployment and a deadweight loss Signup and view all the answers

Why is the equilibrium wage rate of $9 an hour in the illegal region?

Because it is below the minimum wage rate Signup and view all the answers

What is the quantity of labor employed when the minimum wage is set at $10 an hour?

The quantity of labor demanded Signup and view all the answers

What is the willingness of some workers to supply the last hour of labor demanded for?

$8 Signup and view all the answers

What is the main consequence of a rent ceiling in a housing market?

A decrease in the quantity of housing supplied to the efficient quantity Signup and view all the answers

What is the result of a minimum wage set above the equilibrium wage rate?

A surplus of labor Signup and view all the answers

What is the effect of a price floor on the producer surplus in a market?

It decreases the producer surplus Signup and view all the answers

What is the result of a minimum wage set below the equilibrium wage rate?

The market works as if there were no minimum wage Signup and view all the answers

What is the effect of a rent ceiling on the consumer surplus in a housing market?

It increases the consumer surplus Signup and view all the answers

What is the result of a minimum wage in a labor market?