DEC5114 Tutorial 04

If the market for bluetooth headsets is unregulated and is presently characterized by excess demand, you can accurately predict that price will

• increase, the quantity demanded will fall, and the quantity supplied will rise.

• increase, the quantity demanded will rise, and the quantity supplied will fall.

• decrease, the quantity demanded will rise, and the quantity supplied will fall.

• decrease, the quantity demanded will fall, and the quantity supplied will rise.

Which of the following will definitely occur when there is a decrease in the supply of and an increase in demand for wireless speakers?

• an increase in equilibrium price

• a decrease in equilibrium price

• an increase in equilibrium quantity

• a decrease in equilibrium quantity

Suppose that iPhones are normal goods. If the income of iPhone users decreases, you predict that in the market for iPhones

• both equilibrium price and quantity will fall.

• both equilibrium price and quantity will increase.

• equilibrium price will increase and quantity will decrease.

• equilibrium price will fall but quantity will increase.

A price ceiling will be binding only if it is set

• equal to equilibrium price.

• above equilibrium price.

• below equilibrium price.

• none of the above; a price ceiling is never binding.

Which of the following observations would be consistent with a binding price floor in a market?

• A smaller quantity of the good is bought and sold after the price floor becomes effective than before the price floor became effective.

• A smaller quantity of the good is demanded after the price floor becomes effective than before the price floor became effective.

• A larger quantity of the good is supplied after the price floor becomes effective than before the price floor became effective.

• All of the above are correct.

If a binding price ceiling were imposed in the computer market,

• the demand for computers would increase.

• the supply of computers would decrease.

• a shortage of computers would develop.

• a surplus of computers would develop.

Economists generally believe that rent control is

• an efficient and equitable way to help the poor.

• not efficient, but the best available means of solving a serious social problem.

• a highly inefficient way to help the poor raise their standard of living.

• an efficient way to allocate housing, but not a good way to help the poor.

The minimum wage was instituted in order to ensure workers

• a middle-class standard of living.

• employment.

• a minimally adequate standard of living.

• unemployment compensation.

A minimum wage that is set below a market's equilibrium wage will result in

• an excess demand for labor, that is, unemployment.

• an excess demand for labor, that is, a shortage of workers.

• an excess supply of labor, that is, unemployment.

• None of the above is correct.

For a particular product, an effective price floor results in

• quantity demanded greater than quantity supplied.

• quantity supplied greater than quantity demanded.

• quantity demanded equal to quantity supplied.

• demand equal to supply.