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Exam 5: Using Supply and Demand

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Question 51

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Refer to the following graph. A price ceiling would be binding, resulting in a market shortage if it is set at:

A) $3.00.
B) $2.25.
C) $1.50.
D) either $3.00 or $1.50.

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Question 52

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Suppose that initially, demand is given by the equation Qd = 48 − 4P. If, as a result of an increase in income, the quantity demanded increases by 12 at every price, the new demand equation would be:

A) Qd = 60 − 4P.
B) Qd = 36 − 4P.
C) Qd = 48 − 16P.
D) Qd = 48 − 8P.

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Question 53

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When computer manufacturers overcame the enormous 13,000 Chinese character barrier by creating a workable keyboard through voice and handwriting recognition, PCs became more accessible to the Chinese. What was the predicted effect of the events on equilibrium price and quantity of PCs sold in China?

Refer to the following graph. Which price will create the greatest shortage?

Refer to the graph shown. If government establishes a minimum wage at $7.25 per hour:

Refer to the graph shown. Given supply, S0, and demand, D, what tariff would the government have to impose on lumber imported from Canada to reduce imports to 600 tons?

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. If a minimum wage is set at $4.00 (W = 4) , then:

The Rent Control Authority of Chicago has found that total market demand for single occupancy apartments is Qd = 400,000 − 250 P. The Authority also noted that supply is given by Qs = 200,000 + 250P. Price of an apartment is measured in hundreds of dollars and quantity is measured in thousands of apartments. Suppose the Authority decides to impose a rent control of $300 per single-occupant apartment, how many people will be unable to find an apartment at that price?

Quantity restrictions benefit which group the most?

Refer to the following graph. A government-imposed price floor of $2 will result in:

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the quantity demanded?

In 1990 the UN placed trade sanctions on Iraqi oil. In 1996, Iraq was allowed limited export of oil to make war reparations. What was the predicted effect of the two events on equilibrium price and quantity of oil?

Refer to the following graph. Suppose the graph depicted market demand for British cars sold in the United States. A tariff of $1,000 a car would result in tax revenue of:

Suppose that initially, the equations for demand and supply are Qd = 48 − 4P and Qs = 4P − 16, respectively. If the quantity supplied increases by 4 at every price (so that the supply curve shifts to the right) , the equilibrium price will change from:

Suppose that a consumer has a health insurance program with co-payments of $10 per doctor visit. If the consumer purchases 6 doctor visits and the bill charged by the doctor for 6 visits is $360, the portion of this cost covered by a third-party payer is:

Suppose the price of tomatoes dramatically increases. Which of the following could cause this change?

If the government imposes an excise tax on cars equal to $5,000 per automobile, the supply of automobiles will shift to the:

Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $2 co-pay is established? $\begin{array} { | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \\\hline \$ 0 & 1,200 & 0 \\\hline \$ 1 & 600 & 150 \\\hline \$ 2 & 300 & 300 \\\hline \$ 3 & 0 & 450 \\\hline \$ 4 & 0 & 600 \\\hline \$ 5 & 0 & 750 \\\hline \$ 6 & 0 & 900 \\\hline \$ 7 & 0 & 1,050 \\\hline\end{array}$

Suppose a price floor is imposed on eggs above their equilibrium price. The likely result will be:

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift: