B 33 c 2175 d 26 e 3050 ans a dif 2 29 in a crowded

b. 33.
c. 21.75.
d. 26.
e. 30.50.
ANS: A DIF: 2
29. In a crowded city far away, the civic authorities decided that rents were too high. The long-
run supply function of two-room rental apartments was given by q

14

5 p , and the long-run demand
function was given by q  329 − 5 p , where p is the rental rate in crowns per week. The authorities made
it illegal to rent an apartment for more than 25 crowns per week. To avoid a housing shortage, the
authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much
would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?
a. 6.50 crowns
b. 10 crowns
c. 13 crowns
d. 26 crowns
e. 19.50 crowns
ANS: C DIF: 1
30. In a crowded city far away, the civic authorities decided that rents were too high. The long-
run supply function of two-room rental apartments was given by q  5  2 p , and the long-run demand
function was given by q

225
−
4 p , where p is the rental rate in crowns per week. The authorities made
it illegal to rent an apartment for more than 30 crowns per week. To avoid a housing shortage, the
authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much
would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?
a. 10 crowns
b. 17 crowns
c. 20 crowns
d. 40 crowns
e. 30 crowns
ANS: C DIF: 1
31. The price elasticity of demand for a certain agricultural product is constant (over the
relevant range of prices) and equal to
−
1.50. The supply elasticity for this product is constant and
equal to 4. Originally the equilibrium price of this good was $15 per unit. Then it was discovered that
consumption of this product was unhealthy. The quantity that would be demanded at any price fell by
11%. The percent change in the long-run equilibrium consumption of this good was
a.
−
11%.
b. − 8%.

c. − 2%.
d.
−
12%.
e. There is not enough information to determine the answer.
ANS: B
32. The price elasticity of demand for a certain agricultural product is constant (over the
relevant range of prices) and equal to − 2. The supply elasticity for this product is constant and equal to
3. Originally the equilibrium price of this good was $45 per unit. Then it was discovered that
consumption of this product was unhealthy. The quantity that would be demanded at any price fell by
100%. The percent change in the long-run equilibrium consumption of this good was
a. − 100%.
b.
−
64%.
c. − 20%.
d.
−
60%.
e. There is not enough information to determine the answer.
ANS: D
33. Suppose that King Kanuta, whom you met in your workbook, demands that each of his
subjects give him 1 coconut for every coconut that they consume. The king puts all of the coconuts
that he collects in a large pile and burns them. The supply of coconuts is given by S ( p
s
)  100 p
s
, where
p
s
is the price received by suppliers. The demand for coconuts by the king’s subjects is given by D(p
d
)

1,500
−
100 p
d
, where p
d
is the price paid by consumers. In equilibrium, the price received by suppliers
will be
a. $6.