Microeconomics Final Exam Review

Price controls are usually enacted a. as a means of raising revenue for public purposes. b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers. c. when policymakers detect inefficiencies in the market. d. All of the above are correct. {Ans: b. when policymakers believe that the market price of a good or service is unfair to buyers and sellers.}Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor, Toysorama, is mass-producing an excellent copy and plans to flood the market with their $5 doll in 6 weeks. Funster should a. "fight fire with fire" by decreasing supply of its doll for 6 weeks and then increasing the supply. b. increase the supply of their doll now before the other doll hits the market. c. increase the price of their now. d. discontinue their doll. {Ans: b. increase the supply of their doll now before the other doll hits the market.}What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation