for low-wage workers, we should No 42. Ir the government were to provide a wage-

Question

for low-wage workers, we should No 42. Ir the government were to provide a wage-subsidy expect that A the hours worked would increase. B the wage rate that employers pay would fall C the wage rate that employees receive would rise. D government expenditure would increase. the gains to employers and employees would exceed the cost of the subsidy. QUESTION 43 tests your understanding of the impact of regulation on the labor market 43. If the government were to require employers to provide health insurance for full-time low wage workers, we should NOT expect that in the long run A hours worked would fall. B the number of full-time jobs available for such workers would increase. C the average wage rate would fall. D earnings would fall. QUESTIONS 44-46 test your understanding of price ceilings and floors. Which statement about rent control in American cities is FALSE? A Rent control fixes rents below their market-clearing (equilibrium) levels. B Rent control leads to a shortage of rented accommodation. C Rent control is an example of what economists call price ceilings. D Rent control leads to an improvement in the quality of accommodation as landlorc 44. seek to attract tenants without cutting prices. Rent control is usually accompanied by security of tenure laws that prevent landl from evicting tenants in order to raise rents. E Here are three statements about price ceilings and floors. I 45. Ifthe government sets a price ceiling above the market-clearing price, a surplus would emerge. If the government does not intervene in the market, any scarcity would be elimin If the government sets a price floor below the market-clearing price, a shortage emerge II III Choose the correct option from the list below. A None of the statements is true. B I and II are true, III is false. C I and III are true, II is false. D I and III are true, I is false. E All three statements are true.

Explanation / Answer

42. E ( We do not know the extent of the subsidy to guage the benefits and costs)

43. A (We should expect them to increase in fact. With added health insurance benefits, employess would want to work more to earn more.)

44. D (Since low rents are charged, landlords have no incentive to offer better accomodation)

45. E

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