(1.) An investor, who had $75,000 to contribute, was choosing between a boutique and a local shoe shop. After careful deliberation, the investor chose the boutique.

In the first year, the boutique generated enough profit to pay the investor $15,000 (an agreed percentage of profits to be paid to the investor). The investor found out that if he had invested in the local shoe shop he would have received $9,000 (an agreed percentage of profits to be paid to the investor).

The investor's economic profit was __________.

• a.)
• $24,000
• b.)
• $51,000
• c.)
• $15,000
• d.)
• $6,000

(2.) Rent control is a type of __________ that lowers the price of rent below market value. This creates a __________of affordable apartments, as more people want apartments at this price, and fewer landlords are willing and able to offer them.

• a.)
• price floor; shortage
• b.)
• price ceiling; producer surplus
• c.)
• price floor; producer surplus
• d.)
• price ceiling; shortage

(3.) Robertoften complained about theprice of liquor but still purchased a bottle of wine every week.

Which of the following statements is true?

• a.)
• The high taxes failed to modify consumer behavior.
• b.)
• The government experienced a deadweight loss because of the tax.
• c.)
• The consumer demand at this price point is relatively elastic.
• d.)
• The tax would result in a lower revenue for the government.

(4.) If the number of building permits for new housing increase, economists predict that __________.

• a.)
• consumer demand for several markets will decrease
• b.)
• jobless claims will increase now and in the future
• c.)
• consumer demand for several markets will increase
• d.)
• demand for loans will decrease

(5.) Which of the following is not true about the indicator consumer credit?

• a.)
• It is lagging because it can take people a while to borrow money in response to a changing economy.
• b.)
• It measures small, everyday purchases made by consumers.
• c.)
• It estimates changes in the amount of loans that consumers have.
• d.)
• It looks at interest rates in various industries for different kinds of loans.

(6.) Economists use the Consumer Confidence Index to view __________.

• a.)
• whether interest rates will rise or fall
• b.)
• production levels by firms
• c.)
• the relationship between tax revenue and tax rates
• d.)
• decisions about household spending and saving