Questions 62 to 66 are based on the following passage.

In cities with rent control, the city government sets the maximum rent that a landlord can charge for an apartment. Supporters of rent control argue that it protects people who are living in apartments. Their rent cannot increase; therefore, they are not in danger of losing their homes. However, the critics say that after a long time, rent control may have negative effects. Landlords know that they cannot increase their profits. Therefore, they invest in other businesses where they can increase their profits. They do not invest in new buildings which would also be rent—controlled. As a result, new apartments are not built. Many people who need apartments cannot find any. According to the critics, the end result of rent control is a shortage of apartments in the city.

Some theorists argue that the minimum wage law can cause problems in the same way. The federal government sets the minimum that an employer must pay workers. The minimum helps people who generally look for unskilled, low—paying jobs. However, if the minimum is high, employers may hire fewer workers. They will replace workers with machinery. The price, which is the wage that employers must pay, increases. Therefore, other things being equal, the number of workers that employers want decreases. Thus, critics claim, an increase in the minimum wage may cause unemployment. Some poor people may find themselves without jobs instead of with jobs at the minimum wage.

Supporters of the minimum wage say that it helps people keep their dignity. Because of the law, workers cannot sell their services for less than the minimum. Furthermore, employers cannot force workers to accept jobs at unfair wages.

Economic theory predicts the results of economic decisions such as decisions about farm production, rent control, and the minimum wage. The predictions may be correct only if “other things are equal”. Economists do not agree on some of the predictions. They also do not agree on the value of different decisions. Some economists support a particular decision while others criticize it. Economists do agree, however, that there are no simple answers to economic questions.

62. There is the possibility that setting maximum rent may       .

A)  cause a shortage of apartments

B)  worry those who rent apartments as homes

C)  increase the profits of landlords

D)  encourage landlords to invest in building apartment

63. According to the critics, rent control        .

A)  will always benefit those who rent apartments

B)  is unnecessary

C)  will bring negative effects in the long run

D)  is necessary under all circumstances

64. The problem of unemployment will arise        .

A)  if the minimum wage is set too highB)  if the minimum wage is set too low

C)  if the workers are unskilledD)  if the maximum wage is set

65. The passage tells us        .

A)  the relationship between supply and demand

B)  the possible results of government controls

C)  the necessity of government control

D)  the urgency of getting rid of government controls

66. Which of the following statements is NOT true?

A)  The results of economic decisions can not always be predicted.

B)  Minimum wage can not always protect employees.

C)  Economic theory can predict the results of economic decisions if other factors are not changing.

D)  Economic decisions should not be based on economic theory.

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