The best answers eliminate the puzzle concisely. 1. Explain the short-run effect

Question

The best answers eliminate the puzzle concisely.

1. Explain the short-run effects of eliminating rent control on apartments.

2. In a competitive industry, with competitive supplies of labor and capital goods which have only normal gains, which factor obtains the "producer surplus"?

What is the economic effect of taxing this surplus?

3. Is there anything a government can do to increase the productivity of an industry with a competitive free market? Explain.

4. How does a minimum wage function as a tax?

Who is taxed?

Who ultimately pays this tax?

Is there a better way to increase the income of low-wage workers than imposing a minimum wage? Explain.

Explanation / Answer

1. There will be a surge in the rent amount in the short-run but will be stabilized in the long run based on the demand.

2. Product differentiation and brand building will help bring the producer surplus. With taxation, both producer surplus and consumer surplus will fall.

3. To improve productivity, government can reduce the entry/exit barriers into the industry. So that the competitors would increase and thus the firm will be forced to improve productivity.

4. Tax is levied on the employees and the firm. But the tax that is paid by the firm is actually incurred by the end consumers. Taxes should be waived off for the minimum wage workers. Also skill development can be done, so that with more skills, employees will start demanding more because of increase in the productivity.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.