Question

QUESTION 47
Which of the following is a reason why most economists prefer a wage subsidy to a minimum wage?
C ) A. A wage subsidy decreases low-skilled employment while a minimum wage increases it.
accumulation of human capital.
O C. A wage subsidy helps businesses while a minimum wage helps workers.
()D
A wage subsidy does not require more government spending while a minimum wage requires moregovernment spending.
QUESTION 48
The government places rent controls on apartments, pushing the rent below the equilibrium level. The rent remains atthe controlled level. Over time, what should we expect in the apartment market?
C D A. Shortages worsen as supply and demand become more inelastic.
B. Shortages worsen as supply and demand become more elastic.
C ) C. Surpluses worsen as supply and demand become more elastic.
C ) D. Surpluses worsen as supply and demand become more inelastic
OB.A wage subsidy helps lowskilede labor to accumulate human capital; a minimum wage impedes the

QUESTION 49
Every year, thousands of Americans die waiting for kidney transplants. What is the primary reason why there is ashortage of kidneys in the United States?
O A. Rising obesity and diabetes have increased the demand for kidneys.
B. There are few substitutes for kidney transplants.
C. Greater road safety measures have decreased the supply of kidneys.
C ) D. The supply of kidneys is perfectly inelastic.
E. The government prevents the kidney market from reaching an equilibrium price.
QUESTION 50
In Mumbai, the Rent Act of 1947 created incentives for landlords to charge pagdi - a large fee in addition to the rent.Why were renters willing to pay pagdi?
C ) A. The landlord's marginal cost of housing was lower than the rent.
B. The renter's marginal benefit of housing was lower than the rent.
O C. The landlord forced the renter to pay more than the renter's marginal benefit of housing.
C ) D. The renter's marginal benefit of housing was higher than the rent.

Answer 1

47.

B

A wage subsidy offered, is more helpful to the low skilled workers, but minimum wage causes decrease in the jobs for low skilled workers.

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48.

B

When there is a rent control, then it makes rent to be lower than the equilibrium level. In a short run, supply and demand is not so responsive to it, hence shortage is smaller. But, in the long run, shortage worses as supply decreases and demand increases.

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49.

A

There are rising cases of diabetes and obesity leading to higher demand of such transplants. It creates shortage in the market.

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50.

D

It is the marginal benefit for the renters, that is higher. So, they were willing to pay the amount in the beginning.