Suppose that the City of Arcata, California, imposes rent control so that rents cannot exceed $500 per month on one bedroom rental units. Suppose that $500 had also been the equilibrium rental price in Arcata before a huge new apartment complex was built in the nearby town of McKinleyville, where rents are $400 per month. Which of the following is most likely to be true?
a. There will be a lasting surplus of rental housing in Arcata after the new apartment complex is built in McKinleyville.
b. There will be a shortage of rental housing in Arcata at the rent-control price of $500.
c. The equilibrium rental price in Arcata will fall below $500, and thus rent control will not affect the rental market in Arcata.
d. The equilibrium price of $500 per month in Arcata will not change.
c. The equilibrium rental price in Arcata will fall below $500, and thus rent control will not affect the rental market in Arcata.
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Money expansion stops when new reserves introduced into the banking system have been converted into: a. excess reserves
b. securities. c. deposits. d. required reserves. e. loans.
Refer to the graph below. Assume the consumer has an income of $100, the price of X is $2 and the price of Y is $1. According to the graph, the substitution effect of a decrease in the price of X from $2 to $1 is equal to: 
A. 5 B. 20 C. 30 D. 25
Variable costs:
A. are the only costs that exist in the short run. B. are the only costs that exist in the long run. C. do not exist in the long run. D. do not exist in the short run.
Suppose a tenant sues his landlord in court. Does this count as a market transaction?
A. No, because there is a third party (the judge) enforcing rules. B. Yes, because the landlord and tenant are in the same place negotiating. C. No, because there are no voluntary exchanges taking place. D. Yes, because there is a buyer (tenant) and a seller (landlord).