Economics Questions...Please Help!?

[midnite maniac]

I am getting really frustrated with these questions because I am getting no where when I look them up, I would appreciate it if someone could please help me out on this...Thanks Everyone!

1) A recent news story reported that OPEC is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of the many families driving and flying to vacation sites. What would be the combined effect of these two events on the summer market for gasoline?

a) an increase in the price and the quantity.
b) an increase in the price and an unpredictable change in the quantity.
c) an unpredictable change in both the price and the quantity.
d) an unpredictable change in the price and a decrease in the quantity.

2) You notice that the price of DVD players falls and the quantity of DVD players sold increases. This set of observations can be the result of the __________.

a) demand for DVD players shifting to the right.
b) demand for DVD players shifting to the left.
c) supply of DVD players shifting to the right.
d) supply of DVD players shifting to the left.

3) Rent controls in New York City cause all of the following except __________.

a) inefficiently low quality.
b) wasted resources resulting from the opportunity cost of time associated with trying to find an apartment.
c) black markets.
d) an increase in the quantity supplied of rent-controlled apartments.

4) A binding price floor causes ___________.

a) a shortage in the market.
b) a surplus in the market.
c) wasted resources.
d) both b and c.

5) Although most economists agree that price floors and ceilings lead to inefficiency, governments continue to impose such price controls. A possible reason for this is _________.

a) some people do benefit from such price controls.
b) people fear that prices will change dramatically if the price controls were removed.
c) it is politically expedient to enact regulations that benefit influential voting groups.
d) all of the above.

Thanks everyone! I do not know how I can re-pay you for your help other than giving 10 points to the best answer posted

 

[Jaya123]

1) b; 2) c; 3) d; 4) d; 5) d
I hope these are the right answers. Don't hold this against me if they are not. Its been a couple of years since Econ.

 

[Jerry W]

1. d, an unpredictable change in the price and a decrease in the quantity. The quantity would decrease because of the lower supply (supply curve would shift to the left), but the effect on demand would be unpredictable: the "traditional" increase in demand would be offset by lower quantity demanded due to the increased price (people who normally would be taking vacations may change their plans because of the higher prices).

2. c, supply of DVD players shifting to the right. This is an increase in supply, which results in a new equilibrium of lower prices, higher quantities.

3. d, an increase in the quantity supplied of rent-controlled apartments. With a limit on the revenue generated, the quantity supplied would decrease, not increase.

4. d, both b and c. A price floor that is effective would be set above equilibrium, which would be a situation where quantity supplied is greater than quantity demanded (a surplus), which makes b correct, and because the equilibrium price is not allowed to take place it results in wasted resources, making c correct.

5. d, all of the above. All could be plausible explanations for price controls.