ECO 201 Chapter 6 Exam Questions and Answers Fully Solved
According to studies, rent controlled housing tend to deteriorate faster than non-rent-controlled
housing. This is because
A) When there is rent controlled housing, nobody wants to live in the house and take care of it
B) Landlords provide less maintenance and repair since the housing shortage makes it unnecessary for
them to maintain the appearance of their premises in order to attract tenants
C) People lose all respect for the houses since their rent is controlled on them
D) Landlords no longer want to see the house continue in the housing market, so they watch the house
deteriorate - Answers B) Landlords provide less maintenance and repair since the housing shortage
makes it unnecessary for them to maintain the appearance of their premises in order to attract tenants
Dr. Patel talked about issues that states may run into due to vast differences in states excises taxes.
What product example did he specifically provide?
A) alcohol
B) Cigarettes
C) Gasoline
D) jumping jacks - Answers B) cigarettes
If the government imposes a $500 excise tax on imported cars and the market price increases by $100,
what is the economic burden of the tax to consumers?
A) $400
B) $100
C) $0
D) $500 - Answers B) $100
, If the government imposes a $500 excise tax on imported cars and the market price increases by $100,
which curve is relative more elastic?
Supply or demand? - Answers demand
Suppose that, in a competitive market without government regulations, the equilibrium price of
hamburgers is $7 each.
Complete the following table by indicating whether each of the statements is an example of a price
ceiling or a price floor and whether it is binding or nonbinding.
A) The government has instituted a legal minimum price of $8 each for hamburgers.
B) The government prohibits fast-food restaurants from selling hamburgers for more than $8 each.
C) Due to new regulations, fast-food restaurants that would like to pay better wages in order to hire
more workers are prohibited from doing so. - Answers A) price floor, binding
B) price ceiling, non-binding
C) price ceiling, binding
Assuming that the long-run demand for oranges is the same as the short-run demand, you would expect
a binding price ceiling to result in a ____________ (shortage; surplus) that is __________ (larger;
smaller) in the long run than in the short run. - Answers shortage; larger
Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect
is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater
than the quantity supplied at the regulated price.
When cities prevent landlords from charging market rents, which of the following are common long-run
outcomes? Check all that apply.
According to studies, rent controlled housing tend to deteriorate faster than non-rent-controlled
housing. This is because
A) When there is rent controlled housing, nobody wants to live in the house and take care of it
B) Landlords provide less maintenance and repair since the housing shortage makes it unnecessary for
them to maintain the appearance of their premises in order to attract tenants
C) People lose all respect for the houses since their rent is controlled on them
D) Landlords no longer want to see the house continue in the housing market, so they watch the house
deteriorate - Answers B) Landlords provide less maintenance and repair since the housing shortage
makes it unnecessary for them to maintain the appearance of their premises in order to attract tenants
Dr. Patel talked about issues that states may run into due to vast differences in states excises taxes.
What product example did he specifically provide?
A) alcohol
B) Cigarettes
C) Gasoline
D) jumping jacks - Answers B) cigarettes
If the government imposes a $500 excise tax on imported cars and the market price increases by $100,
what is the economic burden of the tax to consumers?
A) $400
B) $100
C) $0
D) $500 - Answers B) $100
, If the government imposes a $500 excise tax on imported cars and the market price increases by $100,
which curve is relative more elastic?
Supply or demand? - Answers demand
Suppose that, in a competitive market without government regulations, the equilibrium price of
hamburgers is $7 each.
Complete the following table by indicating whether each of the statements is an example of a price
ceiling or a price floor and whether it is binding or nonbinding.
A) The government has instituted a legal minimum price of $8 each for hamburgers.
B) The government prohibits fast-food restaurants from selling hamburgers for more than $8 each.
C) Due to new regulations, fast-food restaurants that would like to pay better wages in order to hire
more workers are prohibited from doing so. - Answers A) price floor, binding
B) price ceiling, non-binding
C) price ceiling, binding
Assuming that the long-run demand for oranges is the same as the short-run demand, you would expect
a binding price ceiling to result in a ____________ (shortage; surplus) that is __________ (larger;
smaller) in the long run than in the short run. - Answers shortage; larger
Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect
is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater
than the quantity supplied at the regulated price.
When cities prevent landlords from charging market rents, which of the following are common long-run
outcomes? Check all that apply.
