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Midterm Exam 2 (1) - Midterm Exam 2 Econ 251-002 27 May...

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Midterm Exam 2 Econ 251-002 27 May 2011 40 Questions Please choose the best answer for each question. Use the following information to answer the next 4 questions. Demand Qd = -P + 8 OR P = 8 - Qd Supply: Qs = 2P – 4 OR P = 2 + ½ Qs 4 4 S=MC D=MB P Q 8 2 1. If a price floor is mandated at a price of $3, what quantity will be produced? a. 4 b. 3.5 c. 5 d. 2 2. A price ceiling at $3 will result in a dead weight loss of? 3. A $1 dollar tax per unit sold is imposed on the producer. What is the new quantity sold? 4. Based on the $1 dollar tax in the previous questions, how is the tax burden divided?
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5. Based on the supply and demand schedule shown immediately below, if a price ceiling is introduced at $100, what is the housing surplus/shortage? Rent Quantity demanded, Apartments Quantity supplied, Apartments 50 30 0 100 24 9 150 18 18 200 12 24 250 6 30 300 0 35 a. Surplus of 15 b. Surplus of 24 c. Shortage of 15 d. Shortage of 0 6. A price floor set above the market equilibrium price _____ , and a price ceiling above the equilibrium price ______. 7. Assume the demand for coffee is perfectly inelastic, the supply of coffee is positively sloped, and equilibrium price before the tax is $3. How will a $1 per unit tax on a cup of coffee affect the market?
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