The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, there is
A) a shortage of 4,000 units of rental housing.
B) a shortage of 2,000 units of rental housing.
C) a surplus of 3,000 units of rental housing.
D) neither a shortage nor a surplus of rental housing.
B
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Assume wages paid by a firm to its workers decrease. What will be the reaction of consumers as the market moves to its new equilibrium?
A) Quantity demanded will decrease. B) Quantity demanded will increase. C) The demand curve will shift to the left. D) There will be no reaction by consumers, since input prices determine supply, not demand.
A prisoner's dilemma exists when
A) all parties are as well off as possible. B) all parties are worse off than would be the case if the parties could agree to another set of behaviors. C) all but one party is worse off. D) there are no benefits at all from any strategy.