Chapter 2

C. Rent controls decrease overall societal welfare.

MC Qu. 13 Which of the following statements would most economists agree with? A. Rent control allow for a more equitable distribution of resources. B. Rent controls hurt poor people and help the rich. C. Rent controls decrease overall societal welfare. D. Rent controls hurt everyone.

A. The supply curve would shift right.

MC Qu. 18 A new technology is announced which allows manufacturers to produce widgets for less. Widgets are a key input in the production of whatchamacallits. What would we expect to happen to the market for whatchamacallits? A. The supply curve would shift right. B. The supply curve would shift left. C. The demand curve would shift right. D. The demand curve would shift left.

Equilibrium price will fall, but the effect on quantity is uncertain.

MC Qu. 22 A new discovery makes ink jet computer printers less expensive to produce. At the same time another type of computer printer, the laser printer, also becomes less expensive. What would you expect to happen to the equilibrium price and quantity of ink jet printers?

A. Equilibrium quantity will fall.

MC Qu. 23 Two factors are affecting the domestic auto industry: (1) an increase in cheap Korean imports (2) an increase in the cost of materials. What can we say about equilibrium price and quantity of domestic autos? A. Equilibrium quantity will fall. B. The answer cannot be determined from the information given above. C. Equilibrium price will rise. D. Equilibrium price will fall.

D. Shift left

MC Qu. 29 If a good is inferior, then an increase in income will cause the demand curve to... A. Rotate inward. B. Stay the same. C. Shift right. D. Shift left.

D. Would have a zero price.

MC Qu. 35 A good that is not scarce A. Would have a vertical supply curve over the relevant range. B. Would have an infinite price. C. is not in demand. D. Would have a zero price.

B. At which quantity supplied equals quantity demanded.

MC Qu. 4 The equilibrium price is the price A. Suppliers agree to charge. B. At which quantity supplied equals quantity demanded. C. Where there are surpluses and shortages. D. From which there is always a tendency to move away.

c. The equilibrium price and the equilibrium quantity will increase

MC Qu. 42 Suppose the football team at your university wins 10 games in a row. The following will be a possible outcome of this event in the market for football tickets: A. The equilibrium price will decrease and the equilibrium quantity will increase B. The equilibrium price will increase and the equilibrium quantity will decrease C. The equilibrium price and the equilibrium quantity will increase D. The equilibrium price and the equilibrium quantity will decrease

C. Increase the quantity supplied of cereal.

MC Qu. 46 Say the market for cereal is initially in equilibrium when all the major newspaper published the findings from study that say that eating 2 cups of cereal each day significantly reduces the risk for a heart attack. Other things equal, the publication of these findings will: A. Decrease the market quantity of cereal. B. Increase the supply of cereal. C. Increase the quantity supplied of cereal. D. Decrease the market price of cereal.

C. $50

MC Qu. 48 Suppose the demand for cigarettes was P = 100 - 5Q, and the supply for cigarettes was P = 5Q. The market equilibrium price in this market would be: A. $5 B. $100 C. $50 D. $20

A. The demand for soybeans would shift right and the price and quantity would rise.

MC Qu. 49 If climate change were to reduce the output per acre of wheat but not the output of other crops, what effect this would have on the soybean market? A. The demand for soybeans would shift right and the price and quantity would rise. B. The quantity demanded will increase and the demand will shift right. C. The supply of soybeans will shift left and price will rise. D. The quantity demanded of soybeans will rise and price will increase.

B. 2

MC Qu. 55 Let supply be given by P = 5Q and demand by P = 19 - 2Q. Suppose we now place a tax of 5 per unit of output on the seller. The new equilibrium quantity is: A. 5 B. 2 C. 7 D. 3

C. 15

MC Qu. 56 Let supply be given by P = 5Q and demand by P = 19 - 2Q. Suppose we now place a tax of 5 per unit of output on the seller. The new equilibrium price is: A. 10 B. 7 C. 15 D. 2

B.A tax placed on the buyer to be borne entirely by the seller.

MC Qu. 59 Suppose that the supply curve for a good is vertical. In this case we would expect. A. The tax to be shared equally by both buyer and seller. B. A tax placed on the buyer to be borne entirely by the seller. C. Nothing to be sold so no tax is collected. D. A tax placed on the buyer to be borne entirely by the buyer.

C. Most economists would argue that one could reallocate resources and improve total welfare in the system.

MC Qu. 9 If the government decides to set the price of widgets below the equilibrium price... A. The market quantity of widgets will increase. B. People who buy the widgets are now worse off. C. Most economists would argue that one could reallocate resources and improve total welfare in the system. D. Producers of widgets are now better off.