20. Market demand is given as QD 200-3P. Market supply is given as OS-2P + 100.
ID: 1152907 • Letter: 2
Question
20. Market demand is given as QD 200-3P. Market supply is given as OS-2P + 100. If price increases from $25 to $30, what is the price elasticity of demand? a. 0.2 b. 0.7 C. d. 1.4 2.3 21. What is a legal maximum price at which a good can be sold? a. a price floor b. a price stabilization c. a price support d. a price ceiling 22. If a binding price ceiling is imposed in a market, what happens? There will be a surplus in the market. b. a. The price will be legally forced toward equilibrium price. c. There will be a shortage in the market d. Market forces will guarantee that the price will be at equilibrium When binding price ceilings are imposed in a market, what happens? a. 23. b. c. d. Price no longer serves as a rationing device. The market will be cleared of any shortages or surpluses that existed previously Buyers and sellers both benefit equally The market concludes that the government is attempting to improve market efficiency What will a binding price cciling make it necessary to do? a. b. c. d. 24. supply more of the product develop a way of rationing the product, because there will be a shortage develop a better marketing plan, because there will be a surplus increase demand for the product 25. In the housing market what effect do rent controls have on quantity supplied and quantity demanded? a. causes both to fall b. causes quantity supplied to fall and quantity demanded to rise c. causes quantity supplied to rise and quantity demanded to fal d. causes both to rise 26. Which of the following is NOT a mechanism of rationing used by landlords in cities with rent control? a. waiting lists b. race c. price d. bribes 27. Which of the following is the most likely explanation for the imposition of a price f floor in the market for e imposition corn? Policymakers have studied the effects of the price floor carefully and recognize that the a. price floor is advantageous for society as a whole b. Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policymakers into enacting the price floor. C. Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. d. Sellers of corn, recognizing that the price floor is good for them, have pressured policy- makers into enacting the price floor 28. Why are workers with high skills and much experience not affected by the minimum wage? a. They belong to unions. b. They are not legally guaranteed the minimum wage. c. They generally earn wages less than the minimum wage. d. Their equilibrium wages are well above the minimum wage. 29. What results from a tax placed on the sellers of blueberries' a. It increases costs, lowers profit, and shifts supply to the left (upward). b. It increases costs, lowers profit, and shifts supply to the right (downward). c. It reduces costs, raises profit, and shifts supply to the left (upward). d. It reduces costs, lowers profit, and shifts supply to the right (downward) 30. Market demand is given as QD -60-P. Market supply is given as gS 3P. Which legally imposed price would constitute a binding price floor? a. $9 b. $13 c. $15 d. $18Explanation / Answer
20. P1 = 25, P2 = 30, Q1 = 200 - 3(25) = 200 - 75 = 125
Q2 = 200 - 3(30) = 200 - 90 = 110
Ed = (P1 + P2)/(Q1 + Q2) x (Q2 - Q1)/(P2 - P1) = 55/235 x - 15/5 = - 0.7
Answer is b) 0.7
21. a) Price floor
Price Floor: When government fixes the price of a product at a level higher than equilibrium price, it is called support price. As a result, the supply becomes in excess of demand. Support price is the minimum guaranteed price at which producers can sell their output to the government if so desired. The main consequence of support price is that consumers have to pay a higher price for the good. On the other hand, the income of the producers goes up. The aim of support price is to insulate the farmers from fluctuations in their income which are caused by price variations in the free market.
22. c) There will be shortage in the market.
Price Ceiling: When government fixed price of a product at a level lower than the equilibrium price, the price is called control price or price control by the government. This is done to control the interest of the consumers.
At price lower than equilibrium level, demand is greater than supply which creates shortage in the market.
23. a) Price no longer serves as a rationing device.
Binding price ceiling lies below equilibrium price so person who are able to pay higher price will not get any benefit of getting the good.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.