What is search activity and how does it influence consumer surplus when a rent ceiling creates a housing shortage?
What will be an ideal response?
Search activity is the time spent looking for someone with whom to do business. When a rent ceiling creates a shortage of housing, search activity increases. As people spend more time searching for rental housing, the opportunity cost of housing, which is the rent plus the value of the search time, increases and therefore consumer surplus shrinks.
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Which of the following relationships is CORRECT?
A) Net Investment = Gross Investment + Depreciation B) Consumption expenditure = Net Investment - Depreciation C) Gross Investment = Net Investment + Depreciation D) Depreciation = Gross Investment - Consumption expenditure
Tariffs and quotas tend to
a. raise prices domestically but make more goods available b. raise prices domestically and channel more domestic goods into exports c. raise prices domestically and reduce availability of goods d. lower prices domestically but reduce availability of goods e. none of the above