var imagesLarge = ",kwmodsmacro3eupdates-numbered_fig-ch4_fig_2,kwmodsmacro3eupdates-numbered_fig-ch4_fig_3,kwmodsmacro3eupdates-numbered_fig-ch4_fig_5,kwmodsmacro3eupdates-numbered_fig-ch4_fig_6,,,,,"; var imagesXlarge = "kwmodsmacro3eupdates-unnumbered_fig-ch4_un_01,kwmodsmacro3eupdates-numbered_fig-ch4_fig_1,kwmodsmacro3eupdates-numbered_fig-ch4_fig_4,kwmodsmacro3eupdates-numbered_fig-ch4_fig_7,,kwmodsmacro3eupdates-numbered_fig-ch4_fig_8,kwmodsmacro3eupdates-numbered_fig-ch4_fig_9,,,,"; /*********** CYU answers ***********/ xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-1a'] = "
Fewer homeowners are willing to rent out their driveways because the price ceiling has reduced the payment they receive. This is an example of a fall in price leading to a fall in the quantity supplied. It is shown in the accompanying diagram by the movement from point E to point A along the supply curve, a reduction in quantity of 400 parking spaces.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-1b'] = "The quantity demanded increases by 400 spaces as the price decreases. At a lower price, more fans are willing to drive and rent a parking space. It is shown in the diagram by the movement from point E to point B along the demand curve.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-1c'] = "Under a price ceiling, the quantity demanded exceeds the quantity supplied; as a result, shortages arise. In this case, there will be a shortage of 800 parking spaces. It is shown by the horizontal distance between points A and B.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-1d'] = "Price ceilings result in wasted resources. The additional time fans spend to guarantee a parking space is wasted time.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-1e'] = "Price ceilings lead to inefficient allocation of a good—here, the parking spaces—to consumers.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-1f'] = "Price ceilings lead to black markets.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-2a'] = "False. By lowering the price that producers receive, a price ceiling leads to a decrease in the quantity supplied.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-2b'] = "True. A price ceiling leads to a lower quantity supplied than in an efficient, unregulated market. As a result, some people who would have been willing to pay the market price, and so would have gotten the good in an unregulated market, are unable to obtain it when a price ceiling is imposed.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-1-2c'] = "True. Those producers who still sell the product now receive less for it and are therefore worse off. Other producers will no longer find it worthwhile to sell the product at all and so will also be made worse off.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-2-1a'] = "Some gas station owners will benefit from getting a higher price. QF indicates the sales made by these owners. But some will lose; there are those who make sales at the market equilibrium price of PE but do not make sales at the regulated price of PF. These missed sales are indicated on the graph by the fall in the quantity demanded along the demand curve, from point E to point A.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-2-1b'] = "Those who buy gas at the higher price of PF will probably receive better service; this is an example of inefficiently high quality caused by a price floor as gas station owners compete on quality rather than price. But opponents are correct to claim that consumers are generally worse off—those who buy at PF would have been happy to buy at PE, and many who were willing to buy at a price between PE and PF are now unwilling to buy. This is indicated on the graph by the fall in the quantity demanded along the demand curve, from point E to point A.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-2-1c'] = "Proponents are wrong because consumers and some gas station owners are hurt by the price floor, which creates “missed opportunities”—desirable transactions between consumers and station owners that never take place. Moreover, the inefficiency of wasted resources arises as consumers spend time and money driving to other states. The price floor also tempts people to engage in black market activity. With the price floor, only QF units are sold. But at prices between PE and PF, there are drivers who cumulatively want to buy more than QF and owners who are willing to sell to them, a situation likely to lead to illegal activity.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-3-1a'] = "The price of a ride is $7 since the quantity demanded at this price is 6 million: $7 is the demand price of 6 million rides. This is represented by point A in the accompanying figure.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-3-1b'] = "At 6 million rides, the supply price is $3 per ride, represented by point B in the figure. The wedge between the demand price of $7 per ride and the supply price of $3 per ride is the quota rent per ride, $4. This is represented in the figure above by the vertical distance between points A and B.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-3-1c'] = "At 9 million rides, the demand price is $5.50 per ride, indicated by point C in the accompanying figure, and the supply price is $4.50 per ride, indicated by point D. The quota rent is the difference between the demand price and the supply price: $1.
"; xBookUtils.showAnswers['kwmodsmacro3eupdates-cyu-4-3-2a'] = "The accompanying figure shows a decrease in demand by 4 million rides, represented by a leftward shift of the demand curve from D1 to D2: at any given price, the quantity demanded falls by 4 million rides. (For example, at a price of $5, the quantity demanded falls from 10 million to 6 million rides per year.) This eliminates the effect of a quota limit of 8 million rides. At point E2, the new market equilibrium, the equilibrium quantity is equal to the quota limit; as a result, the quota has no effect on the market.
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