Question

In: Economics

How do producers who are subject to a binding price ceiling respond as the time frame...

How do producers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?

a	Producers are increasingly willing to substitute away from producing the good, and their elasticity of supply becomes more elastic.

b	Producers are increasingly willing to substitute away from producing the good, and their elasticity of supply becomes less elastic.

c	There are no changes, and elasticity of supply remains unchanged.

d	Producers are less willing to substitute away from producing the good, and their elasticity of supply becomes less elastic.

e	Producers are less willing to substitute away from the good, and their elasticity of supply becomes more elastic.

A binding minimum wage will decrease the income of

a	all workers.

b	only those workers in jobs that would normally pay more than minimum wage.

c	no workers.

d	only those workers in jobs that would normally pay less than minimum wage.

e	potential workers seeking employment.

Expert Solution

1. How do producers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?

Ans is a) Producers are increasingly willing to substitute away from producing the good, and their elasticity of supply becomes more elastic.

2. A binding minimum wage will decrease the income of only those workers in jobs that would normally pay more than minimum wage

Ans is b) only those workers in jobs that would normally pay more than minimum wage

A binding minimum wage creates labor surplus, so now the firms will reduce the wages that would normally pay more than minimum wage.

Rahul Sunny answered 2 years ago

1. Which of the following statements is false about a binding price ceiling? -A binding price...

1. Which of the following statements is false about a binding price ceiling? -A binding price ceiling will lower the price of a good -A binding price ceiling will always increase surplus for all consumers. -A binding price ceiling leads to a shortage of goods -A binding price ceiling can create deadweight loss 2. Which of the following is the explicit cost? -Interest foregone on the capital invested in business -Interest received on an investment -Interest paid on loan taken...

Widgets are and always have been subject to a price ceiling. Everyone’s time is worth $4...

Widgets are and always have been subject to a price ceiling. Everyone’s time is worth $4 per hour, and the line to buy a widget is two hours long. One day the government imposes a $10 sales tax on widgets (while keeping the price ceiling in place). a) Illustrate the gains and losses to all relevant groups. b) Can you determine whether the sales tax causes an increase or a decrease in social gain? If so, explain how you know....

What is a price ceiling and when does it becomes binding and non binding? Also provide...

What is a price ceiling and when does it becomes binding and non binding? Also provide an example. What is a price floor and when does it becomes binding and non binding? Also provide an example.

1) explain what a price ceiling is? 2)Do binding price ceilings cause shortages or surpluses? Explain...

1) explain what a price ceiling is? 2)Do binding price ceilings cause shortages or surpluses? Explain why. 3) What are at least three unintended consequences of binding Price Ceilings? Explain. 4) explain what a price floor is?

A shortage results when a a. nonbinding price ceiling is removed from market. b. binding price...

A shortage results when a a. nonbinding price ceiling is removed from market. b. binding price ceiling is removed from a market. c. nonbining price celing is imposed on a market. d. binding price celing is imposed on a market.

Assume in a simple economic example that a binding/effective price ceiling is implemented and in place,...

Assume in a simple economic example that a binding/effective price ceiling is implemented and in place, in a given market for some good, called “Good X”. Next, an economic change occurs in the market. The economic change that occurs is a decrease in the number of buyers in the market. Assume that this is a competitive market, what will happen to the market selling price and the market quantity that is bought and sold in the market for “Good X”?...

26. At the effective (binding) price ceiling: a. quantity supplied exceeds quantity demanded ...

26. At the effective (binding) price ceiling: a. quantity supplied exceeds quantity demanded b. demand exceeds supply c. supply exceeds demand d. quantity demanded exceeds quantity supplied 27. At the effective (binding) price ceiling a. the price will remain constant because the market is in equilibrium. b. the price will increase because there is an excess demand in the market. c. the price will decrease because there is an excess supply...

1. Graph the market for apartment units that has a binding price ceiling (rent control) and...

1. Graph the market for apartment units that has a binding price ceiling (rent control) and a consumer subsidy. 2. Graph the market for tobacco that has both a consumer tax, and a producer subsidy. For each, always indicate any surplus or shortage, and under- or over-allocation.

suppose the government puts a binding price ceiling on baby formula .carefully draw all of the...

suppose the government puts a binding price ceiling on baby formula .carefully draw all of the welfare implications with a standard supply _demand diagram. specifically ,show on the graph the old consumer surplus,old producer surplus ,new consumer surplus, and new producer surplus .clearly specify any transfers and /or deadweight loss. please explain your answers. thank you

Suppose the Australian government decides to implement a binding price ceiling for university fees in 2021....

Suppose the Australian government decides to implement a binding price ceiling for university fees in 2021. A. Will this policy make the market more efficient? Why/why not? Explain your answer in 3-4 lines. [1.5 marks] B. Are all students better off under this policy? Why/why not? Explain your answer in 2-3 lines. [1.5 marks