A price floor policy establishes a minimum price for a market, and the policy is said to be binding if the market equilibrium price is less than the floor price. What impact does a binding price floor have on the market outcome?
A) Excess supply
B) Excess demand
C) Shortage
D) No impact, and the market price and quantity equal their equilibrium values
A
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Assume the Nozick rules are being followed in the economy so that the distribution of income is fair. What must be true for this to create an efficient allocation of resources?
A) All people are earning equal incomes. B) There are no public goods, monopolies, high transactions costs, or external costs and benefits. C) The costs of administering redistribution equals the benefits the poor receive. D) The government must redistribute income in a fashion that minimizes the "big tradeoff." E) The government must allocate resources using a command mechanism.
Increases in the productivity of labor tend to
A. increase the marginal revenue product of labor and the wages employers are willing to pay for any given amount of labor. B. decrease the marginal revenue product of labor and increase the wages employers are willing to pay for any given amount of labor. C. increase the marginal revenue product of labor but have no effect on the wages employers are willing to pay for any given amount of labor. D. decrease the marginal revenue product of labor and the wages employers are willing to pay for any given amount of labor.