Exam 5: Using Supply and Demand

New York City has been experiencing a housing emergency for quite some time. Apartments are difficult to come by. In fact, the vacancy rate has been below 5 percent since World War II. The most likely cause of the housing emergency is:

Refer to the following graph. Suppose the graph depicted market demand for British cars sold in the United States. A tariff of $1,000 a car would result in tax revenue of:

In a third-party payer system:

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to expenditures by consumers in this market if a $2 co-pay is established compared to a free-market equilibrium?

What is an excise tax? Demonstrate the effect of an excise tax paid by suppliers on equilibrium quantity and price.

Suppose that initially, supply is given by the equation Qs = 4P − 16. If, as a result of lower production costs, the quantity supplied increases by 4 at every price, the new supply equation would be:

Refer to the graph shown. Given the quantity restriction of Q_R, a reduction in demand will:

Price ceilings and price floors:

Refer to the following graph. If this graph represents the supply of and demand for an imported product, a tariff of t will result in revenue for the government shown by area:

If the government imposes an excise tax on cars equal to $5,000 per automobile, the supply of automobiles will shift to the:

Refer to the graph shown. Without government intervention, market forces would result in:

Refer to the graph shown. Which of the following wage rates would be an effective price floor?

Refer to the graph shown. A quantity restriction of Q_R will:

A price floor causes excess demand, resulting in the need to ration by some means other than price.

Refer to the table shown that depicts a third-party payer market. What is the quantity demanded if a $1 co-pay is established? Price Quantity Demanded Quantity Supplied \ 0 1,200 0 \ 1 600 150 \ 2 300 300 \ 3 0 450 \ 4 0 600 \ 5 0 750 \ 6 0 900 \ 7 0 1,050

Refer to the graph shown. If government establishes a price floor of $7.25 per hour, there will be a:

Demonstrate graphically and explain verbally the impact of a third-party payer market on supply and demand equilibrium in this case.Be sure to discuss equilibrium quantity,price received by suppliers,price paid by consumers,and total expenditures.

How does total size of expenditures in a third-part payer market compare to the total size of expenditures in a market with no third-party payer?

Suppose that initially, the equations for demand and supply are Qd = 48 − 4P and Qs = 4P − 16, respectively. If the quantity demanded increases by 12 at every price (so that the demand curve shifts to the right), the equilibrium price will change from:

An increase in the Federal minimum wage, assuming the minimum is higher than equilibrium wage and that all other things remain constant, will: