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

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b.33.c.21.75.d.26.e.30.50.ANS: A DIF: 229.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 byq145p, and the long-run demandfunction was given byq3295p, wherepis the rental rate in crowns per week. The authorities madeit illegal to rent an apartment for more than 25 crowns per week. To avoid a housing shortage, theauthorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How muchwould the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?a.6.50 crownsb.10 crownsc.13 crownsd.26 crownse.19.50 crownsANS: C DIF: 130.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 byq52p, and the long-run demandfunction was given byq2254p, where p is the rental rate in crowns per week. The authorities madeit illegal to rent an apartment for more than 30 crowns per week. To avoid a housing shortage, theauthorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How muchwould the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?a.10 crownsb.17 crownsc.20 crownsd.40 crownse.30 crownsANS: C DIF: 131.The price elasticity of demand for a certain agricultural product is constant (over therelevant range of prices) and equal to1.50. The supply elasticity for this product is constant andequal to 4. Originally the equilibrium price of this good was \$15 per unit. Then it was discovered thatconsumption of this product was unhealthy. The quantity that would be demanded at any price fell by11%. The percent change in the long-run equilibrium consumption of this good wasa.11%.b.8%.
c.2%.d.12%.e.There is not enough information to determine the answer.ANS: B32.The price elasticity of demand for a certain agricultural product is constant (over therelevant range of prices) and equal to2. The supply elasticity for this product is constant and equal to3. Originally the equilibrium price of this good was \$45 per unit. Then it was discovered thatconsumption of this product was unhealthy. The quantity that would be demanded at any price fell by100%. The percent change in the long-run equilibrium consumption of this good wasa.100%.b.64%.c.20%.d.60%.e.There is not enough information to determine the answer.ANS: D33.Suppose that King Kanuta, whom you met in your workbook, demands that each of hissubjects give him 1 coconut for every coconut that they consume. The king puts all of the coconutsthat he collects in a large pile and burns them. The supply of coconuts is given byS(ps)100ps, wherepsis the price received by suppliers. The demand for coconuts by the king’s subjects is given byD(pd)1,500100pd, wherepdis the price paid by consumers. In equilibrium, the price received by supplierswill bea.\$6.

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