Elasticity and Incentives

Question 1

Big City has a price ceiling of $750 on rent.

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✔ a shortage; The price ceiling means there will be in the supply of rental spaces.: a shortage; Landlords will not raise rent prices as demand increases because they .: are not allowed to; According to the graph, rent would stabilize at if the price ceiling did not exist.: $1,000

Question 2

✔ are not allowed to would make less profitX want fewer tenants

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✔ are not allowed to

Question 3

more than before less than before✔ about the same amount

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about the same amount

Question 4

If the price of a want goes up, people tend to buy .

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less than before

Question 5

If the quantity demanded of a good changes drastically when the price changes, the good is relatively .

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elastic

Question 6

An example of a need is .

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basic food; An example of a need is .: basic food; An example of a want is .: a big TV; If the price of a need goes up, people tend to buy .: about the same amount; If the price of a want goes up, people tend to buy .: less than before

Question 7

The line at PF represents the .

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price floor; The line at PF represents the .: price floor; The line at PE represents the .: equilibrium price; The line between points A and B represents .: excess supply

Question 8

If the quantity demanded of a good does not change much when the price changes, the good is relatively .

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inelastic

Question 9

An example of a want is .

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a big TV

Question 10

The line at PE represents the .

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equilibrium price

Elasticity and Incentives Answers

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