Pop Quiz

Here are a three multiple-choice questions that I wrote for my Principles of Economics (ECON 103) final exam that my students took earlier this week:

Which group of persons would most likely benefit from rent control imposed in the city of Washington, DC?

a. landlords in Washington, DC

b. persons seeking to rent apartments in Washington, DC

c. landlords in the DC suburbs without rent control

d. renters in the DC suburbs without rent control

Suppose that engineers at BMW invent a new machine that dramatically increases BMW's efficiency at producing automobiles and, thus, causes BMW's production costs to significantly fall.  As a result, BMW expands its output and lowers its prices.  But also, BMW patents this new machine; only BMW can use it.  What is the most likely consequence of this particular invention on the prices that General Motors, Ford, Toyota, and other auto makers charge for the automobiles they produce?

a. no change in the price of non-BMW automobiles

b. the price of non-BMW automobiles will fall

c. the price of non-BMW automobiles will rise

d. there's insufficient information to answer this question

In the 1970s, the federal government imposed price ceilings on oil.  The goal was to make fuels such as gasoline and heating oil more affordable.  One consequence was

a. consumers ended up getting less oil (and oil products, such as gasoline and fuel oil) than they would have gotten without the price ceiling

b. gasoline shortages

c. higher costs to consumers of acquiring oil and oil products

d. all of the above

Anyone want to list the answers in the comments section?