Economics 1022A/B Study Guide - Midterm Guide: Demand Curve, Root Mean Square, Marginal Product
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Consider the market for rental housing in Your town. The demand and supply schedules for rental housing are given in the table.
Price ($ per month) |
Quantity Demanded (thousands of units) |
Quantity Supplied (thousands of units) |
1100 |
40 |
80 |
1000 |
50 |
77 |
900 |
60 |
73 |
800 |
70 |
70 |
700 |
80 |
67 |
600 |
90 |
65 |
500 |
100 |
60 |
- In a Free market for rental housing, what is the equilibrium price and quantity?
- Now suppose the government in Your town decides to impose a ceiling on the monthly rental price. What is the highest level at which such a ceiling could be set in order to have any effect on the marker? Explain your answer.
- Suppose the maximum rental price is set equal to $500 per month. Describe the effect on quantity demanded, supplied, and exchanged in the rental-housing market.
- Suppose a black market develops in the presence of the rent controls in part (c). What is the black market price that would exist if all of the quantity supplied were sold on the black market?
Question 1
The shortage in apartments causes by rent control is worse...
In the long-run, because the long-run supply is more elastic. | ||
In the long-run, because the long-run supply is less elastic. | ||
In the short-run, because the short-run supply is more elastic. | ||
In the short-run, because the short-run supply is less elastic. |
2 points
Question 2
Airline regulation of the 1970s produced a similar result to which of the following government interventions?
Communism | ||
Rent control laws | ||
The Affordable Care Act | ||
Minimum wage laws |
2 points
Question 3
What is a price floor?
A maximum price allowed by law. | ||
A minimum price allowed by law. | ||
A maximum price consumers are willing to pay. | ||
A minimum price consumers are willing to pay. |
2 points
Question 4
In 1938, Congress set the first minimum wage at $0.25 per hour. While this was a modest price floor for the country, it was a very large increase for what US territory which was not exempt from the law?
Arizona | ||
Puerto Rico | ||
Cuba | ||
Hawaii |
2 points
Question 5
Which of the following is a possible effect of a price ceiling?
A surplus of the good. | ||
Increases in product quality. | ||
Increased gains from trade. | ||
People will waste time in lines waiting to purchase the good. |
2 points
Question 6
Which of the following is a possible effect of a price floor?
Decreases in product quality. | ||
The quantity supplied exceeds the quantity demanded. | ||
Increased gains from trade. | ||
A shortage of the good. |
2 points
Question 7
Which of the following is a possible effect of a price ceiling?
Increased gains from trade. | ||
Increases in product quality. | ||
A surplus of the good. | ||
The quantity demanded exceeds the quantity supplied. |