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Exam 4: Extensions of Demand and Supply Analysis

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Question 71

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In the automobile industry,workers have just negotiated a new contract giving workers a large raise.There has also been an increase in the number of licensed drivers who are in the market for a new car.In the market for new automobiles,the effects that these changes will have on the equilibrium price and quantity are:

A) price will increase,and quantity will decrease.
B) price will increase,and the effect on quantity is indeterminate.
C) price will decrease,and quantity will increase.
D) price will decrease,and the effect on quantity is indeterminate.

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Question 72

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Suppose the market clearing price for gasoline is $4.75 per gallon.Now suppose that policy makers pass a law requiring that the maximum price that can be charged is $3.75 per gallon.Such a situation is an example of

A) a price control that will lead to a surplus of gasoline on the market.
B) a price floor that will lead to a shortage of gasoline on the market.
C) a price ceiling that will lead to a shortage of gasoline on the market.
D) a price floor that will lead to a surplus of gasoline on the market.

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Question 73

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Prices provide the rationing function best when

For a given market demand curve,if the market clearing price decreases,then the amount of consumer surplus will

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

The way we know what commodities are relatively scarce or abundant is through

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it.The producer surplus of the pen for that producer is

In 2010,a British Petroleum oil rig exploded in the Gulf of Mexico.The explosion resulted in a major oil spill and a decrease in the supply of oil.At the same time,the average price of gasoline decreased.Which of the following best explains the decrease in the price of gasoline?

A black market

If supply and demand both simultaneously increase,

If supply decreases and demand increases,

During the Winter Olympics in Vancouver,some residents rented rooms to visitors.This behavior

In a market system,which component conveys information about what is relatively scarce and what is relatively abundant?

A price floor represents

An import quota for sugar results in an increase in

The rationing function of prices refers to

Who benefits primarily from rent controls?

-Refer to the above figure.If a price floor of $3 was set,

An increase in supply,other things being equal,will cause which of the following to occur?

What is the result of an agricultural support price established above the equilibrium price?