How do markets respond to price ceilings and price floors? Do attempts to repeal the laws of supply and demand meet their objectives?
Attempts to repeal the laws of supply and demand usually backfire and sometimes produce results virtually the opposite of those intended. Where rent controls are adopted to protect tenants, housing grows scarce because the law makes it unprofitable to build and maintain apartments. When price floors are placed under agricultural products, surpluses pile up because people buy less.
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Use the following diagrams for the U.S. economy to answer the next question.
Which of the diagrams best portrays the effects of an increase in resource productivity?
A. Graph (1) B. Graph (2) C. Graph (3) D. Graph (4)
The figure above shows the market for milk. If the population increases, then the efficient quantity of milk ________ and the producer surplus ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
The South's post-Civil War (1861–1865) backwardness was due to all of the following, according to Hughes and Cain (2011), except
(a) Extensive wartime destruction of life and wealth (b) The fiscal disaster of the Confederacy, whereby nine-tenths of the state banks of the South vanished (c) The price of cotton, which did not fall, but did fail to increase as it had prior to the Civil War (1861–1865), thus turning cotton into a less profitable crop (d) The sharecropping system's failure to provide incentives for innovation in agriculture
The price elasticity of demand for labor equals
A) the percentage change in the price of labor divided by the percentage change in the supply of labor. B) the change in the quantity demanded of labor divided by the change in the price of labor. C) the slope of the demand curve for labor. D) the percentage change in the quantity demanded of labor divided by the percentage change in the price of labor.