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Economics 1021A/B Study Guide - Final Guide: Shortage, Siemens S200, Economic Surplus


Department
Economics
Course Code
ECON 1021A/B
Professor
Jeannie Gillmore
Study Guide
Final

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Parkin/Bade, Economics: Canada in the Global Environment, 8e
Chapter 6 Government Actions in Markets
6.1 A Housing Market with a Rent Ceiling
1) The time spent looking for someone with whom to do business is called
A) elasticity of time.
B) market time.
C) search activity.
D) opportunity time.
E) development time.
Answer: C
Diff: 1 Type: MC
Topic: A Housing Market with a Rent Ceiling
Use the figure below to answer the following questions.
Figure 6.1.1
2) Consider the market for rental housing illustrated in Figure 6.1.1 when the demand curve is
D0. The equilibrium in an unregulated market is
A) 1,500 rooms rented at $150 a month.
B) 1,500 rooms rented at $200 a month.
C) 1,750 rooms rented at $175 a month.
D) 1,750 rooms rented at $200 a month.
E) 2,000 rooms rented at $150 a month.
Answer: A
Diff: 1 Type: MC
Topic: A Housing Market with a Rent Ceiling
Copyright © 2013 Pearson Canada Inc. 10
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
3) Refer to Figure 6.1.1. If the demand for rental housing increases and the demand curve shifts
rightward from D0 to D1, and the market is unregulated, the number of rooms rented is
A) 1,500, and the rent rises to $200 a month.
B) 2,000, and the rent is at its initial level.
C) 1,750, and the rent rises to $175 a month.
D) 2,000, and the rent rises to $200 a month.
E) 1,750, and the rent rises to $200 a month.
Answer: C
Diff: 1 Type: MC
Topic: A Housing Market with a Rent Ceiling
4) Refer to Figure 6.1.1. If the demand for rental housing increases and the demand curve shifts
rightward from D0 to D1, and there is a strictly enforced rent ceiling of $150 per room,
A) the number of rooms rented will increase to 2,000.
B) the number of rooms rented is 1,500.
C) there is a housing shortage of 500 rooms.
D) both B and C.
E) the number of rooms rented decreases to 1,000.
Answer: D
Diff: 2 Type: MC
Topic: A Housing Market with a Rent Ceiling
5) Refer to Figure 6.1.1. Suppose the demand for rental housing is shown by demand curve D1,
and there is a rent ceiling of $150 per room. What is the highest rent that would be charged in a
black market?
A) $150 a month
B) $175 a month
C) $200 a month
D) $100 a month
E) cannot be determined from the graph, but we know it is greater than $200
Answer: C
Diff: 3 Type: MC
Topic: A Housing Market with a Rent Ceiling
6) Refer to Figure 6.1.1. Suppose the demand for rental housing is shown by demand curve D1,
and there is a rent ceiling of $150 per room. What is the highest amount that would be expended
on search activity?
A) $200.
B) $150.
C) $100.
D) $50.
E) $0.
Answer: D
Diff: 3 Type: MC
Topic: A Housing Market with a Rent Ceiling
Copyright © 2013 Pearson Canada Inc. 11
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
7) An illegal market in which the equilibrium price exceeds the price ceiling is
A) a rental market.
B) a capital market.
C) a black market.
D) an efficient market.
E) a housing market.
Answer: C
Diff: 1 Type: MC
Topic: A Housing Market with a Rent Ceiling
8) If the government imposes a maximum rent for housing that is above the equilibrium price,
then you predict that
A) the law will have no effect in the market for housing.
B) the law will generate a shortage of housing.
C) the law will create a surplus of housing.
D) the demand curve for housing shifts rightward.
E) the supply curve of housing shifts leftward.
Answer: A
Diff: 2 Type: MC
Topic: A Housing Market with a Rent Ceiling
9) When a price ceiling is set below the equilibrium price,
A) the demand curve shifts leftward.
B) the quantity supplied exceeds the quantity demanded.
C) the quantity supplied equals the quantity demanded.
D) the supply curve shifts rightward.
E) the quantity demanded exceeds the quantity supplied.
Answer: E
Diff: 2 Type: MC
Topic: A Housing Market with a Rent Ceiling
Copyright © 2013 Pearson Canada Inc. 12
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