Question

18. Rent control laws may lead to which of the following unintended effects?

a. Under-the- table payments

b. Increased forced commuting

c. Higher search costs

d. All of the above

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Without public education, which of following is true about the quality of education delivered in a market?

a.It cannot be determined

b.It will be low

c.The market will provide the mechanism for assuring it

d.There will be no oversight of quality

20.Compared to a competitive market, a monopolist will charge

Lower price and produce a larger quantity

Lower price and produce a smaller quantity

Higher price and produce a larger quantity

Higher price and produce a smaller quantity

                                                                                    

Answer 1

(18) (d)

Rent control act imposes a ceiling price on rent to be charged, which is less than free market equilibrium rent at which demand for housing will exceed the supply of housing, as a result a shortage of housing will occur. This may lead to black-market renting (under-the-table additional rent charged by house-owners) and/or tenants being forced to rent housing at far-away localities, increasing travel cost and/or increase in search cost for housing.

(19) (d)

In absence of public education, quality of private education cannot be benchmarked or assessed.

(20) (d)

Monopoly price is higher than and quantity produced is lower than those in competitive equilibrium.