Version A

I. Multiple choice [1 pt each: 20 pts total]

(1)d. (2)b. (3)a. (4)a. (5)a. (6)c. (7)b. (8)d. (9)a. (10)d.
(11)c. (12)d. (13)d. (14)e. (15)b. (16)a. (17)a. (18)b.

II. Problems

(1) [Demand and consumer surplus: 12 pts]

1. 50 units;
2. $250;
3. $2;
4. $125;
5. decrease;
6. $80.

(2) [Supply and producer surplus: 12 pts]

1. 40 units;
2. $120;
3. $5;
4. $40;
5. decrease;
6. $30.

(3) [Equilibrium: 12 pts]

1. excess supply;
2. $3;
3. 4 units;
4. $12;
5. buyers;
6. $22.

(4) [Price elasticity of demand: 8 pts]

1. decrease;
2. 8 percent;
3. decrease;
4. 4 percent.

(5) [Welfare analysis of price controls: 12 pts]

1. 6 million;
2. increase;
3. $11 million;
4. decrease;
5. $14 million;
6. $3 million.

(6) [Price elasticity of supply: 8 pts]

1. increase;
2. approximately 4 percent;
3. increase;
4. approximately 10 percent.

Version B

I. Multiple choice [1 pt each: 20 pts total]

(1)a. (2)b. (3)a. (4)a. (5)c. (6)a. (7)d. (8)a. (9)d. (10)b.
(11)b. (12)e. (13)e. (14)d. (15)a. (16)b. (17)b. (18)a.

II. Problems

(1) [Demand and consumer surplus: 12 pts]

1. 70 units;
2. $210;
3. $8;
4. $245;
5. increase;
6. $160.

(2) [Supply and producer surplus: 12 pts]

1. 60 units;
2. $240;
3. $5;
4. $90;
5. increase;
6. $70.

(3) [Equilibrium: 12 pts]

1. excess demand;
2. $6;
3. 5 units;
4. $30;
5. sellers;
6. $29.

(4) [Price elasticity of demand: 8 pts]

1. increase;
2. 6 percent;
3. increase;
4. 2 percent.

(5) [Welfare analysis of price controls: 12 pts]

1. 6 million;
2. decrease;
3. $7 million;
4. increase;
5. $4 million;
6. $3 million.

(6) [Price elasticity of supply: 8 pts]

1. increase;
2. approximately 6 percent;
3. increase;
4. approximately 15 percent.

[end of answer key]