Chapter 6_1: Markets in Action

Chapter 6_1: Markets in Action; Time: 40 phút

Question 1: The short-run impact of the San Francisco earthquake on the housing market was to shift the
a. long-run supply curve of housing rightward.
b. short-run supply curve of housing rightward.
c. long-run supply curve of housing leftward.
d. short-run supply curve of housing leftward.

Question 2: The immediate result of the 1906 San Francisco earthquake on the housing market was to decrease
a. the short-run supply, raise rents, and decrease the equilibrium quantity.
b. housing demand, raise rents, and increase the equilibrium quantity.
c. the short-run supply, reduce rents, and increase the equilibrium quantity.
d. housing demand, reduce rents, and decrease the equilibrium quantity.

Question 3: If after the 1906 San Francisco earthquake the cost of building an apartment was the same regardless of whether there were 50,000 or 150,000 apartments in existence, then the
a. long-run supply of apartments was perfectly elastic.
b. long-run supply of apartments was perfectly inelastic.
c. short-run supply of apartments was perfectly inelastic.
d. short-run supply of apartments was perfectly elastic.

Question 4: After the initial decrease in supply, as part of the long-run adjustment of the housing market following the San Francisco earthquake, the
a. long-run supply curve shifted leftward.
b. short-run supply curve shifted even more leftward.
c. long-run supply curve shifted rightward.
d. short-run supply curve shifted rightward.

Question: 5 - 10

Question 5: In the figure above, the initial demand curve is D0. There are no rent ceilings nor rent floors. Thus, the initial equilibrium monthly rent is
a. $300 per month.
b. $100 per month.
c. $200 per month.
d. $400 per month.

Question 6: In the figure above, the demand curve shifts rightward from D0 to D0. There are no rent controls. In the short run, the increase in demand results in
a. lower rents and a decrease in the equilibrium quantity.
b. higher rents and an increase in the equilibrium quantity.
c. higher rents and a decrease in the equilibrium quantity.
d. lower rents and an increase in the equilibrium quantity.

Question 7: In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be
a. a shortage of 200,000 apartments.
b. a shortage of 500,000 apartments.
c. a shortage of 400,000 apartments.
d. no shortage nor a surplus of apartments.

Question 8: In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be a
a. an elimination of a black market.
b. a reduction in renters' search activities.
c. a deadweight loss created.
d. an increased number apartments rented.

Question 9: In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be
a. a shortage and a decrease in search costs
b. a surplus and an increase in search costs.
c. a surplus and a decrease in search costs.
d. a shortage and an increase in search costs.

Question 10: In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be
a. a shortage of 300,000 apartments.
b. a surplus of apartments.
c. a shortage of 200,000 apartments.
d. neither a shortage nor a surplus of apartments.

Question 11: A rightward shift of the demand curve for apartments will
a. discourage investment in buildings, thus increasing the original fall in rents.
b. discourage investment in buildings, thus increasing the original rise in rents.
c. stimulate investment in buildings, thus reducing the original rise in rents.
d. stimulate investment in buildings, thus reducing the original fall in rents.

Question 12 - 16

Question 12: In the above figure, with demand given by D0, the equilibrium in an unregulated market will be
a. 250,000 rooms rented at $150
b. 150,000 apartments rented at $150.
c. 150,000 apartments rented at $200.
d. 200,000 rooms rented at $200.

Question 13: In the figure above, if the demand for apartments increases from D0 to D1 and the market is unregulated, in the short run the number of apartments rented will
a. increase to 200,000 and the rent will rise to $200.
b. remain unchanged and the rent will rise to $200.
c. increase to 200,000 and the rent will remain at its initial level.
d. increase to 250,000 and the rent will rise to $200.

Question 14: In the figure above, if the demand for apartments increases from D0 to D1 and the market is unregulated, in the long run the number of apartments rented will
a. increase to 200,000 and the rent will rise to $200.
b. remain unchanged from the initial quantity and the rent will rise to $200.
c. increase to 250,000.
d. increase to 200,000 and rent will be $150.

Question 15: In the figure above, if the demand for apartments from D0 to D1 and there is a strictly enforced rent ceiling of $150 per apartment,
a. there will be a surplus of apartments on the market.
b. the number of rooms rented will quickly decrease by 50,000.
c. there will be a shortage of apartments.
d. the number of rooms rented will quickly increase by 50,000.

Question 16: In the figure above, if the demand for apartments increases from D0 to D1 and there is a strictly enforced rent ceiling of $150 per apartment, then the new quantity supplied will be
a. less than the initial quantity supplied before the increase in demand.
b. greater than the initial quantity supplied before the increase in demand, and the rent will increase.
c. the same as the initial quantity supplied before the increase in demand.
d. greater than the initial quantity supplied before the increase in demand, but the rent will be unchanged.

Question 17: The effect of a rent ceiling set above the equilibrium price
a. encourages the development of black markets.
b. is powerful, eliminating price as a regulator of quantity supplied and quantity demanded.
c. is essentially nonexistent.
d. is powerful, strengthening price as a regulator of quantity supplied and quantity demanded.

Question 18: A rent ceiling below the equilibrium rent will encourage
a. a larger number of apartments rented.
b. a more efficient allocation of housing.
c. no change in the number of apartments rented.
d. increased search time and black markets.

Question 19: A rent ceiling set above the equilibrium rent
a. restricts both the quantity demanded and the quantity supplied.
b. restricts the quantity demanded but not the quantity supplied.
c. restricts the quantity supplied but not the quantity demanded.
d. has no effect.

Question 20: A rent ceiling set below the equilibrium price
a. restricts both the quantity demanded and the quantity supplied.
b. restricts the quantity supplied but not the quantity demanded.
c. restricts the quantity demanded but not the quantity supplied.
d. has no effect.

Question 20 - 25

Question 21: In the figure above, originally the apartment rental market is in short run and long run equilibrium with a rental price of $600 per month. Then the government imposes a rent ceiling of $500 per month. This will lead to a
a. shortage of 2000 apartments
b. surplus of 2000 apartments.
c. surplus of 1000 apartments.
d. shortage of 1000 apartments.

Question 22: In the figure above, originally the apartment rental market is in short run and long run equilibrium with a rental price of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments are a normal good and incomes rise. The increase in income will lead to the
a. shortage shrinking
b. shortage growing.
c. rental price increasing.
d. shortage remaining the same size.

Question 23: In the figure above, originally the apartment rental market is in short run and long run equilibrium with a rental price of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments are an inferior good and incomes rise. The increase in income will lead to the
a. shortage shrinking
b. shortage remaining the same size.
c. rental price increasing.
d. shortage growing.

Question 24: In the figure above, originally the apartment rental market is in short run and long run equilibrium with a rental price of $600 per month. Then the government imposes a rent ceiling of $500 per month. Now suppose that demand increases. The increase in demand will result in the quantity supplied
a. increasing.
b. decreasing.
c. increasing, staying the same, or decreasing depending on how much demand increases.
d. staying the same.

Question 25: In the figure above, originally the apartment rental market is in short run and long run equilibrium with a rental price of $600 per month. Then the government imposes a rent ceiling of $500 per month. If the law is strictly enforced, the maximum for which an apartment will rent on the black market is
a. more than $700 per month.
b. $700 per month.
c. $600 per month.
d. less than $600 per month.

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