Question

10. Rent controls, effective price ceilings, result in tenants ending up with the best possible housing choices over the long run.

True

False

11. A tax on the supply function (curve) in a market results in: increasing the cost of production and leads to a dead weight loss of social surplus in the affected market, ceteris paribus.

True False

Theoretically, the "supply schedule" of the perfect competitive firm is a table or list of the prices acceptable to a producer (firm or entrepreneur) and their corresponding "quantity of supply" decisions at each price; given the "marginal cost" of providing these alternative quantities at the various prices within the schedule, ceteris paribus.

True

False

The "law of demand" states that there are 'ceteris paribus' conditions affecting the demand schedule and that these conditions are the 'non-price determinants' of demand including: income; wealth; price of related goods (substitutes and complements); the number of consumers in the market and consumer expectations about the future.

True

False

If there is a change in a 'ceteris paribus' condition of demand then there will be a change in demand.

True

False

The main problem(s) resulting from the government imposition of price floors and price ceilings is that private economic activity (exchange) is reduced, leading to inefficiency and dead-weight loss of social surplus and a redistribution of the total surplus between consumers and producers; possibly resulting in "black market" corruption activities that might undermine the liberties of the people and their ability to produce and trade value in society.

True

False

A decrease in Supply will lead to a surplus and market forces will bid the price down.

True

False

In any market movement (change), some will be made better off and some will be made worse off in the short run if not in the long run.

True

False

An increase in the price of milk will cause a decrease in the demand for milk.

True

False

A primary condition for "free market laissez-faire capitalism" to function is that the "individual" would have property rights and be able to choose their deployment (use) in pursuit of their own 'rational self-interest' to produce value and earn an income, according to their own moral judgment, up to the point that their choices would directly interfere with the rights and liberties of other individuals in their person and property.

True

False

Producer Surplus is the

The area above the supply curve but under the demand curve.

Area under the demand curve but above the price.

The area above the supply curve but under the price.

Equal to the total area of social surplus.

Answer 1

(10) False

Rent control creates a shortage in housing market, which lowers the housing choices in long run.

(11) True

A tax on producers or consumers lead to deadweight (social inefficiency) loss.

(12) True

(13) True

Law of demand states that a good's quantity demanded varies inversely with its price, ceteris paribus (holding non-price determinants of demand unchanged).

(14) True

A change in non-price determinants of demand will change the demand.

(15) True

(16) False

A decrease in supply will shift supply curve leftward, increasing price ceteris paribus.

(17) True

(18) False

Increase in price of milk will decrease its quantity demanded.

(19) True

(20) Producer surplus is area above supply curve and below the market price.