Consider the market for housing. Suppose that after a decrease in consumer’s income, the price of houses fell down while the quantity of houses remained the same. Which of the following is a possible explanation for why this happened?

Consider public transportation, namely the subway trains in New York city. Suppose consumers’ income increases and that, as a result, the equilibrium quantity Qtrain remains unchanged, and the price Ptrain decreases. Which of the following is a possible explanation for why this happened?

Consider the following two statements:  If there is an increase in the number of people getting education, then the poverty rate will go down. The government should increase funding for education in schools and universities.

Consider the market for regular doughnuts. A new kind of fusion food, called “Mochi donuts” is invented in Econland. These mochi donuts are made from a hybrid batter that makes doughnuts that are flaky and moist, with a satisfying chew. Suppose that the impact of this invention in the market for regular doughnuts is that the price of regular doughnuts remains unchanged, and the equilibrium quantity decreases. A possible explanation for these changes is that “Mochi donuts” and regular doughnuts are ________________ and the supply of regular doughnuts is _____________________________. (Fill in the blanks.)

If the government is concerned about the excessively low price in the unregulated free market equilibrium above, it could impose a __________. If the government sets the price at $8, there is _________ and the amount is equal to __________. 

 Consider the following statements about income elasticity: For inferior goods, income elasticity is negative. For necessity goods, income elasticity is above one. When income elasticity for a good is more than one, the share of income spent on the good is higher with higher income.

  Question 36 is based on the diagram above, which represents the production possibilities frontier for an economy where only butter and guns are produced.    Point(s) ________represent efficiency in the economy and which point(s) ________ represent(s) underemployment and point______ represents  unattainable. (Fill in the blanks. The comma separates the answer choice that fills the first blank from the answer choice that fills the second blank.)

Consider the market for the Apple watch. Suppose that demand is perfectly elastic in the short run and supply is perfectly inelastic. If a tax is imposed in the market, the entire burden of the tax falls on___________, while ___________ surplus does not change. (Fill in the blanks.)

What will be the total expenditures of the government on the program?

Use the diagram above and the following scenario to answer questions 26 – 28. When the price equals $8 in the above market there is excess supply. Suppose the government has a buyout program where it purchases all the excess supply needed to prevent the price from falling below $8.