Question

Exhibit 4-4 Supply and demand curves for good X Graph C Graph B Graph A Price (dollars) Price (dollars) Price (dollars) Quantity (per year) Quantity (per year) Quantity (per year) 7. A decrease in buyers' income, assuming good X is a normal good, combined with a decrease in the wage rate paid to workers producing good X would be represented by which of the following changes in equilibrium shown in Graph C of Exhibit 4-4? a. E, to E. b. E, to Es. c. E, to E2. d. E to E. 8. Many student government candidates at colleges and universities propose rent controls on local rental housing as a way to help students afford rental housing. Economic theory suggests that this policy would ham students as a whole despite the fact that some students who are able to find housing at the reduced price would benefit. Which of the following are some of the offsetting secondary effects of the rent controls that would work to the disadvantage of students? a. There would be a shortage of rental housing, making it very difficult for students to find causing increased discrimination in the rental housing market. b. There would be a reduction in the quality of rental housing. c. There would be a reduction in the future supply of rental housing. d. All of these would be secondary effects of the rent controls. 9. Nonsmoking sections in restaurants are designed to remove from a ma a. smoke; with food service b. third parties; for food service c. externalities; with public goods d. third parties; externality e. nonsmokers; for food service at Logan airport, residents of East Boston complain about the noise. The 10. When airplanes take off and land at Logan au por residents of East noise during same planes make the same noise durin p oston from Paris, but there are no for most of the trip because a. - c. d. jet sounds; noise doesn't travel at high altitudes wird parties; there are no externalities externalities; there are no third parte complaints; airplanes are insulated Tee riders; passengers must pay to board the plane e. free riders; passenger

Answer 1

Answer 7 d. E1 to E4

The shift can be broken down into two parts. First due to the decrease in in the income of buyers will lead to the decrease in the demand of the good. This will lead to a leftward shift of the demand curve. Again astro which is decrease it will lead to to decrease in the supply and that is presented with a leftward shift of the supply curve.

Answer 8 d all of these would be secondary effects of the rent control.

With rent control the prices for renting will reduce. Equilibrium price falls this full lead to excess demand over the supply in that market leading to a shortage. This will also drop the quality of housing and also the future supply of housing.

Answer 9 c .Externalities; with public good

The cost of externalities is the smoking with is a loss to non smokers. This cost is not beared upon by food service industry.

Answer 10 b third party ; because there are no externalities

Residence office Boston third party and the plane noise is the externality. For most of the trip there are no third parties and is there any third parties there are no externalities.

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