Suppose that with a strictly enforced rent ceiling on rooms of $550 a month, a black market develops. How high could the black market rent be and would the on-campus housing market be fair? Explain your answer
What will be an ideal response?
The black market rent could be as high as $600 a month, which is the maximum rent someone is willing to pay for the 2,000th room. If a black market develops, using the "fair results" approach, the market is not fair because the poorest students cannot afford the higher black market rent. Using the "fair rules" approach, the market is not fair because the rent ceiling blocks some voluntary exchanges unless the buyers and sellers are willing to participate in the black market.
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People obtain their money incomes basically by
A) chance. B) hard work. C) inheritance. D) supplying something for which others are willing to pay.
Define moral hazard and adverse selection in the context of health insurance markets. Make sure to discuss why they are problems for health insurance markets
What will be an ideal response?
Which of the following statements is correct?
a. Marginal social cost is the share of marginal cost caused by an activity that is paid for by the persons who carry out the activity. b. Marginal private cost is the share of marginal cost caused by an activity that is borne by persons other than those who carry out the activity. c. Marginal social cost is the sum of marginal private cost and incidental cost. d. Marginal private cost and incidental cost are one and the same.
Refer to the graph shown. Given the long-run average cost curve, a seller must produce 18 units just to break even if the price the seller expects is roughly:
A. $52. B. $54. C. $50. D. $58.