21). The housing shortages caused by rent controls are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

True

False

22).Nathan buys a new sound system for his dorm room for $500. He receives consumer surplus of $400 from the purchase. At what amount does Nathan value his sound system?

a. $100

b. $400

c. $500

d. $900

23). What does the law of demand imply?

a. price and quantity supplied are inversely related

b. price and quantity demanded are inversely related

c. price and quantity demanded are positively related

d. price and quantity supplied are positively related

24). When the price elasticity of demand is perfectly inelastic, what can be said about the elasticity and the demand curve?

a. The elasticity is 0 and the demand curve is vertical.

b. The elasticity is 0 and the demand curve is horizontal.

c. The elasticity approaches infinity and the demand curve is vertical.

d. The elasticity approaches infinity and the demand curve is horizontal.

25). s apoint inside the production possibilities frontier efficient and feasible?

a. efficient but not feasible

b. feasible but not efficient

c. both efficient and feasible

d. neither efficient nor feasible

26). Suppose that a tax is placed on music concerts. If the buyer ends up paying the majority of the tax, what do we know?

a. The demand curve is more inelastic than the supply curve.

b. The supply curve is more inelastic than the demand curve.

c. The government has placed the tax on the seller.

d. The government has placed the tax on the buyer.

27). At the midpoint of a downward-sloping linear demand curve, what would price elasticity be?

a. inelastic

b. elastic

c. unit elastic

d. perfectly elastic

28). What does the saying "There is no such thing as a free lunch" mean?

a. Even people on welfare have to pay for food.

b. The cost of living is always increasing.

c. To get something we like, we usually have to give up another thing we like.

d. All costs are included in the price of a product.

29) Necessities tend to have price inelastic demands, whereas luxuries have price elastic demands.

True

False

30). Suppose that scientists find evidence that proves tattoos improve the body's immune system. What would we expect to see?

a. no change in the demand for tattoos

b. a decrease in the demand for tattoos

c. an increase in the demand for tattoos

d. a decrease in the supply of tattoos

31). Lauren and Amy sell lemonade on a street corner. Each glass costs them $0.05 to make. At the end of the day, they have sold 50 glasses and received a total producer surplus of $22.50. What are Lauren and Amy selling each glass for?

a. $0.15

b. $0.50

c. $0.30

d. $0.45