Q 1: Refer to the graph below: A technological advance that improves pollution c
ID: 2439953 • Letter: Q
Question
Q 1: Refer to the graph below:
A technological advance that improves pollution control methods would cause which of the following changes on the graph? A movement from
Select one:
a. q1 to q2.
b. A1 to A2.
c. C1 to C2.
d. TT1 to TT2.
e. 0 to C2.
Q 2: Refer to the graph below:
Curves D1 and S1 represent the market for marijuana if it is illegal. Legalization of marijuana will cause equilibrium price and quantity to change to
Select one:
a. P1 and Q2.
b. P2 and Q1.
c. P3 and Q4.
d. P4 and Q3.
e. none of the choices.
Q 3: Refer to the graph below:
The negative slope of the demand curve shows that
Select one:
a. the marginal cost of education increases as more is purchased.
b. tuition can be raised above T1 dollars.
c. the marginal benefit of education increases as more is purchased.
d. the marginal benefit of each additional year of education decreases.
e. there are positive spillover benefits of education.
Q 4: Refer to the graph below:
If the supply and demand for rental housing are DD and SS, what effect will a rent control law that sets the maximum allowable rent at $400 have on the market? It will lead to
Select one:
a. a surplus of 10 thousand units.
b. a surplus of 5 thousand units.
c. a shortage of 5 thousand units.
d. a shortage of 10 thousand units.
e. no change in equilibrium rent or quantity.
Q 5: Refer to the graph below:
The demand curve and supply curve for beef are DD and SS. Which of the following could cause supply to shift to S1S1?
Select one:
a. All of the choices
b. An increase in the price of a substitute in production
c. An increase in income
d. A decrease in the cost of production
e. An increase in the cost of production
Other goods and services A1 91 42 T. 2 C, C2 Pollution control (S)Explanation / Answer
(Q1) (d)
A technological advancement regarding pollution control will shift the PPF outward along the axis representing pollution control in dollars (i.e. horizontal axis), which represents a movement from TT1 to TT2.
(Q2) (d)
Legalization of marijuana will increase its supply, shifting supply curve rigtward from S1 to S2. New equilibrium is at intersection of D1 and S2, with new price P4 and new quantity Q3.
(Q3) (d)
Diminishing marginal utility (benefit) derived from increase in consumption of the good leads to a negatively sloped demand curve.
(Q4) (d)
Since maximum allowed price ($400) is less than equilibrium price of $600, this is a binding price ceiling, at which quantity demanded is 25,000 and quantity supplied is 15,000, leading to a shortage of 10,000 (= 25,000 - 15,000).
(Q5) (d)
A supply curve will shift rightward if there is technological advancement and/or a decrease in input/production costs.
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