Ch6_Practice_Test_Questions

Ch6_Practice_Test_Questions - 6 C h a p t e MARKETSINr...

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6 ACTION Housing Markets and Rent Ceilings Topic: Market Response to a Decrease in Supply Skill: Analytical 1) The short-run impact of the San Francisco earthquake on the housing market shifted the A) short-run supply curve of housing leftward. B) long-run supply curve of housing leftward. C) short-run supply curve of housing rightward. D) long-run supply curve of housing rightward. Answer: A Topic: Market Response to a Decrease in Supply Skill: Recognition 2) The immediate result of the 1906 San Fran- cisco earthquake on the housing market was to decrease A) the short-run supply, raise rents, and decrease the equilibrium quantity. B) the short-run supply, reduce rents, and in- crease the equilibrium quantity. C) housing demand, reduce rents, and decrease the equilibrium quantity. D) housing demand, raise rents, and increase the equilibrium quantity. Answer: A Topic: Long-Run Adjustments to a Decrease in  Supply Skill: Analytical 3) If after the 1906 San Francisco earthquake the cost of building an apartment was the same re- gardless of whether there were 50,000 or 150,000 apartments in existence, then the A) short-run supply of apartments was perfectly elastic. B) short-run supply of apartments was perfectly inelastic. C) long-run supply of apartments was perfectly elastic. D) long-run supply of apartments was perfectly inelastic. Answer: C 201  C h a p t e r
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2 0 2 C H A P T E R   6 Topic: A Housing Market Skill: Analytical 5) In the figure above, the initial demand curve is D 0 . There are no rent ceilings nor rent floors. Thus, the initial equilibrium monthly rent is A) $100 per month. B) $200 per month. C) $300 per month. D) $400 per month. Answer: C Topic: A Housing Market Skill: Analytical 6) In the figure above, the demand curve shifts rightward from D 0 to D 1 . There are no rent controls. In the short run, the increase in de- mand results in A) higher rents and a decrease in the equilibrium quantity. B) lower rents and a decrease in the equilibrium quantity. C) higher rents and an increase in the equilibri- um quantity. D) lower rents and an increase in the equilibrium quantity. Answer: C Topic: A Regulated Housing Market Skill: Analytical 7) In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the rel- evant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be A) a shortage of 500,000 apartments. B) a shortage of 400,000 apartments. C) a shortage of 200,000 apartments. D) no shortage nor a surplus of apartments. Answer: C Topic: A Regulated Housing Market Skill: Analytical 8) In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the rel- evant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be a A) a deadweight loss created.
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This note was uploaded on 06/15/2011 for the course ECON 221 taught by Professor Gordanier during the Spring '08 term at South Carolina.

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Ch6_Practice_Test_Questions - 6 C h a p t e MARKETSINr...

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