1. A product that is a luxury will have a demand curve that tends to be very A.

Question

1. A product that is a luxury will have a demand curve that tends to be very

A. unpredictable in nature

B. Vertical

C. shallow in nature

D. steep in nature

2.If government decides to control the amount of a good allowed to be transacted in a market, this will

A. always result in an increase in efficiency in the market

B. result in an increase in efficiency in the market.

C. increase incentives for market participants to engage in black market activities.

D. lead to more of the good being produced

3. Typically , the government limits the quantity of a good that can be bought and sold by:

A. setting a price ceiling above the equilibrium price.

B. maintaining the equilibrium price regardless of changes in demand and supply.

C. licensing the supplies.

D. setting a price floor below the equilibrium price.

4. A binding price ceiling will cause a persisten____, and a binding price floor will cause a persistent____

A.surplus: surplus

B. surplus;shortage

C. shortage;shortage

D. shortage; surplus

5. The market for salmon is in equilibrium. A binding price ceiling, a binding price floor, and a quota limit below the market equilibrium in this market would all cause:

A. Deadweight loss arising from a quantity exchanged that is less than the equilirium quantity .

B. deadweight loss arising from a transfer of surplus from consumers to producers

C. a supply price that exceeds a demand price

D. revenue collected by the government on each unit of salmon harvested

6. A product that is necessity will have a demand curve that tends to be very

A. steep in nature

B. perfectly horizontal in nature

C. shallow in nature

D. unpredictable in nature

Explanation / Answer

First four are answered below-

1) c is correct

Luxury goods are elastic in nature which leads to shallow demand curve.

2) c is correct

When there is a limit on the quantity, shortage is created in the market which is eliminated by selling the goods in the black market.

3) c is correct

When government licences the supplies there are less numbr of sellers in the market.

4) D is correct

Effective price ceiling is a decrease in price which reduces quantity supplied and increases quantity demanded, creating shortage. Effective price floor is an increase in price which reduces quantity demanded and increases quantity supplied, thus creating surplus.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.