Question

07 por increase in gas price 9) Assume we are looking at the electric car market How would a major increase affect this market? a) Supply increases..A shortage developes. price increases..higher prices preval b) Demand decreases..a surplus developes price declines. lower prices prevail c) Supply decreases.. A shortage developes..price increases higher prices preval Demand increases a short pe developes price increases higher prices prevall 10) In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the U.S.? A) The supply curve shifted to the left. B) The supply curve shifted to the right. C) The demand curve shifted to the right. D) The demand curve shifted to the left. 11) A change in all of the following variables will shift the market demand for a product except A) the price of the product. B) population and demographics. C) income. D) tastes. 12) In a city with rent-controlled apartments, all of the following are true except A) apartments usually rent for rates lower than the market rate. B) apartments are often in shorter supply than they would be without rent control. C) it usually takes more time to find an apartment than it would without rent control D) landlords have an incentive to rent more apartments than they would without rent control 13) In order to be binding, a price ceiling A) must lie above the free market equilibrium price. B) must lie below the free market equilibrium price. C) must coincide with the free market equilibrium price. D) must be high enough for firms to earn a profit. 14) Scarcity refers to the situation in which A) unlimited wants exceed limited resources. B) unlimited resources exceed limited wants. C) a country's population is larger than its resource base. D) a nation's poverty level increases faster than its population. 15) If the percentage increase in price is 15 percent and the value of the price elasticity of demand is |-31, then quantity demanded A) will increase by 45 percent B) will increase by 5 percent. C) will decrease by 45 percent. D) will decrease by 5 percent.

Answer 1

Ans) 1) Gas and electric cars are substitutes. So when price of gas increases, demand for electric cars will increase. Demand curve will shift to the right and both price and quantity will increase.

Option d.

2) Due to decrease in import of caviar, supply will decrease and supply curve will shift to the left.

Option a.

3) Determinants of demand ÷

• Number of buyers.
• Taste and preferences.
• Income of consumer.
• Change in fashion or trend.
• Change in price of related goods.

Option a. It will change quantity demanded.

4) Price ceiling is the legal maximum price that can be charged for any product. A binding price ceiling is below the equilibrium price. It causes shortage. It also leads to decrease in quality of product provided.

Option d.

5) Option b.

6) Scarcity is when there are limited resources and unlimited wants.

Option a.

7) Price elasticity of demand = %change in quantity demanded ÷ %change in price.

-3 = %change in quantity demanded ÷ 15

%change in quantity demanded = 15×(-3) = -45% , that is quantity demanded decreases by 45%.

Option c.

major increase in gas price 9) Assume we are looking at the electric car market. How would a major increase affect this market? a) Supply increases.. A shortage developes..price increases higher prices prevail b) Demand decreases..a surplus developes price declines. lower prices prevail c) Supply decreases.. A shortage developes price increases higher prices preval 20 Demand increases a shortage develones price increases..higher prices prevall O n October 2005, the U.S. Fish and Wind Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the U.S.? A The supply curve shifted to the left. B) The supply curve shifted to the right. C) The demand curve shifted to the right. D) The demand curve shifted to the left. 11) A change in all of the following variables will shift the market demand for a product except A) the price of the product. B) population and demographics. C) income. D) tastes. 12) In a city with rent-controlled apartments, all of the following are true except A) apartments usually rent for rates lower than the market rate. B) apartments are often in shorter supply than they would be without rent control. C) it usually takes more time to find an apartment than it would without rent control. Dy landlords have an incentive to rent more apartments than they would without rent control 13) In order to be binding, a price ceiling A) must lie above the free market equilibrium price. B) must lie below the free market equilibrium price. C) must coincide with the free market equilibrium price. D) must be high enough for firms to earn a profit. 14) Scarcity refers to the situation in which A) unlimited wants exceed limited resources. B) unlimited resources exceed limited wants. C) a country's population is larger than its resource base. D) a nation's poverty level increases faster than its population. 15) If the percentage increase in price is 15 percent and the value of the price elasticity of demand is |-3, then quantity demanded A) will increase by 45 percent. B) will increase by 5 percent. C) will decrease by 45 percent. D) will decrease by 5 percent.