Question 1

Exhibit 5-1 
Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 8 a.m.?

Accepted Answer

The answer of Exhibit 5-1 
Refer to Exhibit 5-1, which...

Question 2

Exhibit 5-1 
Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 11 p.m.?

Accepted Answer

The answer of Exhibit 5-1 
Refer to Exhibit 5-1, which...

Question 3

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university prices classes at the price required to achieve equilibrium at 10 a.m., there will be

Accepted Answer

Since the demand for seats in 10 a.m. classes is higher than the demand for seats in 8 a.m. classes, the price required to achieve equilibrium at 10 a.m. will be higher than the price at 8 a.m. If the university prices classes at this higher price, there will be a surplus of seats in 8 a.m. classes, as the quantity supplied (fixed) will exceed the quantity demanded (lower demand). Therefore, choice B is correct.

Question 4

Exhibit 5-2

Refer to Exhibit 5-2. If the tuition is set at $50 there will be

Accepted Answer

At a tuition rate of $50, the quantity demanded at 8 a.m. is 60 while the quantity supplied is only 40, resulting in a shortage of seats. However, at 10 a.m., the quantity demanded is only 20 while the quantity supplied is 40, resulting in a surplus of seats. Therefore, there is equilibrium at 8 a.m. with a shortage of seats and equilibrium at 10 a.m. with a surplus of seats, making the best choice D.

Question 5

Exhibit 5-2

Refer to Exhibit 5-2. There will need to be some kind of non-price rationing device used for both 8 a.m. classes and 10 a.m. classes if the tuition is set

Accepted Answer

The answer of Exhibit 5-2

Refer to Exhibit 5-2. There will...

Question 6

Exhibit 5-2

Refer to Exhibit 5-2. If the tuition is set at $60 there will be

Accepted Answer

The answer of Exhibit 5-2

Refer to Exhibit 5-2. If the...

Question 7

Suppose that there are two laws proposed for eviction notices: Plan A requires landlords to give a renter 30 days to vacate an apartment once he has been served an eviction notice and Plan B requires landlords to give a renter 60 days to vacate an apartment once he has been served an eviction notice. It follows that landlords will find

Accepted Answer

Plan B is more expensive than Plan A because it requires landlords to give renters a longer notice period, thus prolonging the time during which the property is not generating income. This means that landlords will have to forego rental income for longer periods of time under Plan B than under Plan A.

Question 8

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₁ creates __________ at 8 a.m. and __________ at 11 p.m.

Accepted Answer

At 8 a.m., a toll of P₁ creates a shortage because the quantity supplied (Qs) is less than the quantity demanded (Qd). At the same time, the toll has no effect on the market at 11 p.m. because the supply and demand curves intersect at the equilibrium point, indicating no shortage or surplus.

Question 9

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and standardized test scores. Enrollment at this school will likely be

Accepted Answer

By imposing entrance requirements in the form of minimum high school GPA and standardized test scores, University A is using non-price rationing devices. This means that even if there are students who are willing and able to pay the equilibrium tuition fee, they may not be admitted if they do not meet the entrance requirements. As a result, enrollment at University A is likely to be below the equilibrium level.

Question 10

The space on the freeway is fixed at any instant of time. A supply curve that shows this is

Accepted Answer

The space on the freeway is fixed and cannot be increased or decreased at any instant of time. Therefore, the supply curve for freeway space is perfectly vertical.

Question 11

Good weather in cities such as San Diego

Accepted Answer

While good weather may not have a direct cost, it may contribute to higher living expenses such as increased demand for housing, property taxes, and the cost of maintaining public space. These indirect payments make good weather a costly commodity for residents of the city even without it being explicitly priced on a market.

Question 12

Exhibit 5-2

Refer to Exhibit 5-2. If the tuition is set at $70 there will be

Accepted Answer

The answer of Exhibit 5-2

Refer to Exhibit 5-2. If the...

Question 13

Exhibit 5-1 
Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Suppose that the government decides to set the money price of driving on the freeway at zero, but creates programs that encourage drivers to carpool. If the carpooling program is sufficiently successful to eliminate the shortage of freeway space at 8 a.m., graphically the result of the increase in carpooling would be a

Accepted Answer

The answer of Exhibit 5-1 
Refer to Exhibit 5-1, which...

Question 14

Exhibit 5-1 
Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Suppose that the government decides to set the money price of driving on the freeway at zero, but builds more freeways to eliminate the shortage of freeway space at 8 a.m.  Graphically, the result of the increase in freeway space would be shown by

Accepted Answer

If the government builds more freeways to eliminate the shortage of freeway space at 8 a.m., the supply of freeway space will increase. This will be shown graphically by shifting the supply of freeway space curve rightward. The demand curve will remain the same since the money price of driving is set at zero. Therefore, the equilibrium point will move to the right, resulting in a higher quantity of freeway space supplied and a lower quantity demanded at 8 a.m.

Question 15

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university can only charge a single price and wishes to maximize the total number of seats purchased during the day, it should set the price

Accepted Answer

The answer of The demand for seats in 10 a.m....

Question 16

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₂ creates __________ at 8 a.m. and __________ at 11 p.m.

Accepted Answer

A toll of P₂ creates equilibrium at both 8 a.m. and 11 p.m. This is where the quantity supplied and quantity demanded are equal, resulting in neither a shortage nor a surplus.

Question 17

When congestion occurs on the freeway (because of a shortage of freeway space), an economist would most likely explain this by saying that it is because

Accepted Answer

Economic theory suggests that when the price of a good or service is below the equilibrium price, a shortage occurs. In the case of the freeway, the price of driving on it (usually in the form of tolls or taxes) may be too low, causing excessive demand and congestion. Therefore, an economist would most likely explain freeway congestion as a result of the price being below the equilibrium level.

Question 18

Exhibit 5-1 
Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. At P = $0, there is a ________ of freeway space at 8 a.m. and ________ at 11 p.m.

Accepted Answer

The answer of Exhibit 5-1 
Refer to Exhibit 5-1, which...

Question 19

If more people join carpools and travel to work together the

Accepted Answer

Carpooling reduces the number of vehicles on the road, thus reducing the demand for freeway space. This leads to a leftward shift of the demand curve as there is less pressure on the freeway.

Question 20

A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates equilibrium travel flows at the busiest time of day, it will create a __________ at all other times.

Accepted Answer

At times other than the busiest, demand for road space decreases, leading to a surplus of space since the toll deters some drivers who might otherwise use the road when it is less congested.

Quiz 5: Supply, Demand, and Price: Applications

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 8 a.m.?

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 11 p.m.?

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university prices classes at the price required to achieve equilibrium at 10 a.m., there will be

Exhibit 5-2 Refer to Exhibit 5-2. If the tuition is set at $50 there will be

Exhibit 5-2 Refer to Exhibit 5-2. There will need to be some kind of non-price rationing device used for both 8 a.m. classes and 10 a.m. classes if the tuition is set

Exhibit 5-2 Refer to Exhibit 5-2. If the tuition is set at $60 there will be

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₁ creates at 8 a.m. and at 11 p.m.

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and standardized test scores. Enrollment at this school will likely be

The space on the freeway is fixed at any instant of time. A supply curve that shows this is

Good weather in cities such as San Diego

Exhibit 5-2 Refer to Exhibit 5-2. If the tuition is set at $70 there will be

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university can only charge a single price and wishes to maximize the total number of seats purchased during the day, it should set the price

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₂ creates at 8 a.m. and at 11 p.m.

When congestion occurs on the freeway (because of a shortage of freeway space) , an economist would most likely explain this by saying that it is because

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. At P = $0, there is a of freeway space at 8 a.m. and at 11 p.m.

If more people join carpools and travel to work together the

A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates equilibrium travel flows at the busiest time of day, it will create a __________ at all other times.

Quiz 5: Supply, Demand, and Price: Applications

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 8 a.m.?

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 11 p.m.?

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university prices classes at the price required to achieve equilibrium at 10 a.m., there will be

Exhibit 5-2 Refer to Exhibit 5-2. If the tuition is set at $50 there will be

Exhibit 5-2 Refer to Exhibit 5-2. There will need to be some kind of non-price rationing device used for both 8 a.m. classes and 10 a.m. classes if the tuition is set

Exhibit 5-2 Refer to Exhibit 5-2. If the tuition is set at $60 there will be

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P1 creates __________ at 8 a.m. and __________ at 11 p.m.

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and standardized test scores. Enrollment at this school will likely be

The space on the freeway is fixed at any instant of time. A supply curve that shows this is

Good weather in cities such as San Diego

Exhibit 5-2 Refer to Exhibit 5-2. If the tuition is set at $70 there will be

The demand for seats in 10 a.m. classes at the university is higher than the demand for seats in 8 a.m. classes. The supply of seats is fixed. If the university can only charge a single price and wishes to maximize the total number of seats purchased during the day, it should set the price

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P2 creates __________ at 8 a.m. and __________ at 11 p.m.

When congestion occurs on the freeway (because of a shortage of freeway space) , an economist would most likely explain this by saying that it is because

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. At P = $0, there is a ________ of freeway space at 8 a.m. and ________ at 11 p.m.

If more people join carpools and travel to work together the

A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates equilibrium travel flows at the busiest time of day, it will create a __________ at all other times.

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₁ creates at 8 a.m. and at 11 p.m.

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. A toll of P₂ creates at 8 a.m. and at 11 p.m.

Exhibit 5-1 Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. At P = $0, there is a of freeway space at 8 a.m. and at 11 p.m.