Week 3- Problem set

Question 1

When Payroll tax enacted:
worker wage
firm wage

Answer 1

Wage receives by worker falls.
Wage that firms have to pay rises.
Bad situation.

Question 2

Rent control help-

Answer 2

Help poor people by making housing more affordable

Question 3

Rent control dictates-

Answer 3

Maximum rent that landlords may charge tenants.

Question 4

Congress sought that workers and firms pay-

Answer 4

Half and half for the FICA tax.

Question 5

Payroll tax-

Answer 5

Tax on wages that firms pay their workers.

Ex: FICA tax.

Question 6

Price floor-

Answer 6

Legal minimum price

Ex: minimum wage.

Question 7

Tax burden-

Answer 7

Falls more heavily on the side of market that is less elastic.

Question 8

Policymakers use taxes to-

Answer 8

Raise revenue for public purposes.

Influence market outcomes.

Question 9

Price ceiling-

Answer 9

Legal maximum on price at which a good can be sold.

Question 10

Tax incidence-

Answer 10

Distribution of tax burden btwn buyers and sellers.

Burden of tax shared among participants in a market.

Question 11

When policymakers set price-

Answer 11

They obscure signals that normally guide allocation of society’s resources.

Question 12

Minimum wage dictates-

Answer 12

Lowest price employers may pay for labor.
Minimum wage that firms may pay for workers.
Have greatest impact for teenage labor.

Question 13

Example of rent control-

Answer 13

Price ceiling.