Question 4: Which of the following is most likely to result in a shortage of gas

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Question 4: Which of the following is most likely to result in a shortage of gasoline? O I) The Organization of the Petroleum Exporting Countries (OPEC) reduces the amount of crude oil it supplies to world markets 2) In response to higher crude oil prices, U.S. gasoline producers raise the price of the gasoline they sell 3) The U.S. government imposes a price ceiling that is below the market price for gasoline 4) The demand for gasoline rises Question 5: Ceteris paribus, when government adopts a price floor to support an agricultural crop C 1) Consumers benefit through lower prices 2) A shortage is likely unless farmers increase production 3) A shortage is likely unless farmers decrease production 4) The result is a surplus if the price floor is set above the market equilibrium price Question 6: The equilibrium rental price of strip mall business space in Albuquerque is $5000 per month. The Albuquerque Small Business Association has argued that the city council should impose a price ceiling of $3500 per month for strip mall business space in order to generate more space rental by lawyers, hair salons, and laser tag operations. All else equal, if this policy is implemented we would expect that C1) strip mall business space owners will be upset by the policy because they will not be able to find enough renters C 2) the market will reach equilibrium C 3) there will be a shortage of space available to rent in Albuquerque strip malls C 4) all of the strip mall space occupants (i.e., the renters) will be better off by S1500 per month Question 16: The price of corn in Mexico has fallen more than 70 percent since NAFTA took effect. (NAFTA is a free trade agreement between the US, Canada, and Mexico.) Some policy makers attribute this to an increase in the supply of corn from the U.S. to Mexico. Others attribute t to a decrease in the demand for corn by consumers in Mexico. How can we determine which policy makers are right? 1) t depends on whether the demand curve or the supply curve changed first if the equilibrium quantity of corn sold decreased, then the dominant cause must have beern the supply shift in the market for corn 3) if the equilibrium quantity of corn sold increased, then the dominant cause must have been the demand shift in the market for corn C 4) if the equilibrium quantity of corn sold increased, then the dominant cause must have been the supply shift in the market for corn

Explanation / Answer

Ans)

4.
3) The Us government imposes a price ceiling that is below the market price for gasoline.
If the US government imposes a price ceiling that is below the market price then the quantity supplied will be less than the quantity demanded thereby creating a shortage.
5.
4) The result is a surplus if the price floor is set above the market equilibrium price.
If this price floor is above the equilibrium price the quantity supplied will exceed the quantity demanded and there will be a surplus.
6.
3) there will be a shortage available to rent in Albuquerque strip malls.
Since the price will be set lower than the equilibrium price the quantity demanded will excedd quanity supplied and there will be a shortage.
16.
1) It depends on whether the demand curve or the supplycurve changed first.
Depending on what cruve shifted first it can be determined which policymakers are right.

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