Economics 1021A/B Chapter 6: Chapter 6.docx
ECON 1021A/B Full Course Notes
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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 38
You are the president of the United States. In an attempt to make gasoline prices cheaper, you have imposed a binding price ceiling on gas. What would you expect your critics to say?
a. |
The binding price ceiling will cause firms to minimize their spending on the research and development of alternatives to gasoline. |
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b. |
The binding price ceiling will discourage individuals from using their personal automobile to commute to work or school. |
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c. |
The binding price ceiling will increase the likelihood that customers obtain needed |
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d. |
The binding price ceiling will encourage oil companies to deplete the resource too quickly. |
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e. |
The binding price ceiling will cause firms to produce only gasoline of the highest quality. |
1.05000 points
QUESTION 39
If a firm's long-run average total costs increase as it increases its scale of production, the firm is experiencing:
a. |
increasing returns from specialization. |
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b. |
diseconomies of scale. |
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c. |
economies of scale. |
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d. |
constant returns to scale. |
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e. |
diminishing marginal product. |
1.05000 points
QUESTION 40
A(n) __________ in the elasticity of supply or demand in a market for a good that is taxed would tend to __________ tax revenue from that tax.
a. |
increase; increase |
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b. |
increase; have no effect on |
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c. |
decrease; have no effect on |
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d. |
decrease; decrease |
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e. |
increase; decrease |
1.05000 points
QUESTION 41
The costs of a market activity paid for by an individual engaged in the market activity are:
a. |
external costs. |
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b. |
social costs. |
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c. |
common costs. |
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d. |
free-rider costs. |
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e. |
internal costs. |
1.05000 points
QUESTION 42
Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
a. |
Equilibrium price will go down and equilibrium quantity will be indeterminate. |
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b. |
Equilibrium price will go up and equilibrium quantity will go down. |
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c. |
Equilibrium price will go up and equilibrium quantity will be indeterminate. |
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d. |
Equilibrium price will go down and equilibrium quantity will go up. |
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e. |
Equilibrium price will go up and equilibrium quantity will go up. |
1.05000 points
QUESTION 43
The minimum wage law is an example of a:
a. |
price floor. |
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b. |
law that sets the minimum number of hours that an employee must work for wages during the week. |
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c. |
law that allows individual employers and employees to make free decisions. |
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d. |
law that requires quantity demanded to equal quantity supplied. |
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e. |
price ceiling. |