Question

Note: All Supply and Demand questions are ceteris paribus– that is only assuming the given changes in the problem

1. San Francisco, and California in general, has very restrictive policies on building living spaces. (The city of Houston from 2011 to 2014 authorized more 1 unit building permits than all of California from 2011 to 2014). With (assume) a fixed housing stock but many tech workers moving to the city, the effect is ________ prices due to a ________ shock.

a. higher, negative demand

b. higher, negative supply

c. higher, positive demand

d. higher, positive supply

e. lower, negative demand

f. lower, negative supply

g. lower, positive demand

h. lower, positive supply

2. Suppose a flood destroys strawberry farmland. You should expect the price of strawberries to go __________ due to a _______ shock.

a. higher, negative demand

b. higher, negative supply

c. higher, positive demand

d. higher, positive supply

e. lower, negative demand

f. lower, negative supply

g. lower, positive demand

h. lower, positive supply

3. The federal government monitors cherry production and will order tart cherry farmers to destroy their crops. This recently happened, with a Michigan farmer posting a picture of cherries he was forced to destroy going viral (see the link). It should be expected that this program will _____ prices and the quantity sold will ____.

a. increase, increase

b. increase, decrease

c. decrease, increase

d. decrease, decrease

e. None of the above

4. Suppose half of the population of the United States in the snap of a finger. Fewer people then are farmers producing food. The impact this will have on food prices will be: ______.

a. higher

b. uncertain

c. lower

5. The book “Peasants into Frenchmen” (p. 13) discusses how impoverished peasant women sold their hair. However, over time peasants became richer and the Chinese began trading hair; with the price going from 100 Francs/kg in the early 1880’s to 50 in 1902. Draw the following:

a. Initial supply and demand for hair

b. The effect of French peasants becoming richer

c. The effect of Chinese supplying hair

d. The final price

Hair

6. The Washington Wizards basketball team began the 2012 season with 12 losses. Tickets to the

game against the Blazers cost $1.69 and against the Heat were $26. Draw on the graph:

a. supply and demand for tickets against the Blazers, with the appropriate price

b. supply and demand for tickets against the Heat, with the appropriate price

7. The US government had price controls on airfare between states, but not within a state. Los

Angeles to San Francisco is a 338 mile flight, and Chicago to Minneapolis is 339. The flight

from Chicago to Minneapolis was about twice as expensive as the LA to San Francisco due to

the price controls. This is an example of a price ________.

a. ceiling

b. floor

8. Draw on the following graph:

a. Supply and demand of tickets from Chicago to Minneapolis

b. The appropriate price control

c. The quantity consumed under the price controls

d. PS and CS under price controls

9. Following the abolishment of the price controls, it should be expected that prices ________ and quality (not quantity, quality) ________ of trans-state flights.

a. increased, increased

b. increased, decreased

c. decreased, increased

d. decreased, decreased

10. Some city governments, such as New York’s, want to make housing affordable for the poor. To do so they enact a maximal prices that apartments can charge. This is an example of a _____.

a. price ceiling

b. price floor

Answer 1

1.With workers moving to the city,the demand for houses will rise.This will cause price to rise even when supply is inelastic.

Answer-C

2.The supply will fall as a result or flood.Supply curve shifts to the left raising price level.

Answer-b

3.The federal government's rule will reduce the supply of cherries and raise its price but reduce the quantity.

Answer-b

4.Because food is very limited and its demand is high,the price will be high.

Answer-A

Please note that an expert is under obligation to answer only the first four questions.