Eco Groups Answer Note §

(F) Day of the week: Thursday Created Time: January 2, 2020 4:01 PM Database: Class Notes Database Date: January 2, 2020 4:01 PM Days Till Date: Passed Last Edited Time: June 9, 2021 10:42 AM

1. b. To be binding the ceiling has to be below

why? because a price ceiling will only influence the prices if it is set below the equilibrium

2. a. shortage

why? because the lower price creates more demand while making sellers less willing to sell.

3. d

The landlord doesn’t see the point of cleaning or renovating the low income apartment. The renter feels the apartment is cheap so not likely to clean it

4. b

it helps the seller as products never go below a certain point from competitions

5. d

6. c

The seller benefit from a price floor as the product wont get too cheap to sell for profit.

7. a

If both supply and demand curve is elastic, the shortage will become larger as it expands the spread between the two curves

8. c

rent control is limiting how high rent can get (ceiling)

restricting gasoline below equalibrium (ceiling)

only minimum wage is a price floor

9. d

The increase in demand will shift the demand curve right, raising the equalibrium until it becomes binding

10. b

why: higher price discourage buyers from buying Qd goes down or shifts to the left, changing the equalibrium

11. c

The supply curve shifts upward or to the left because the income goes down, less sellers want to sell

12. a

The tax makes both the buyer and seller share the burden, both prices goes up, making less people buy.