The following graph shows the market for bread in the Soviet Union, which was a command economy. Suppose that the central planners mandate a total production of 4,000 loaves of bread. They also fix the price at 30 rubles per loaf of bread.

1. If the central planners fix the price of bread at 30 rubles, what is likely to occur?

I. A shortage of bread
II. A surplus of bread
III. Producers illegally selling bread at prices above 30 rubles per loaf
IV. Producers illegally selling bread at prices below 30 rubles per loaf

A. II and IV only

B. III and IV only

C. I, III, and IV only

D. I and III only

E. I and II only

2.

2. True or False: A decline in the demand for bread will always completely eliminate the shortage of bread.

True

False

3. The central planners suddenly change their minds. They issue a new mandate to produce 5,000 loaves of bread and to fix the price at 30 rubles per loaf of bread.

True or False: There is no shortage and no surplus of bread after the new mandate, assuming nothing else changes.

True

False

4.
the Soviet Union collapses and releases all price controls on all market goods, including windshield wipers. What should we expect to happen to the price and quantity of windshield wipers on the day after the collapse? (Assume there isn’t enough time for sellers to produce more windshield wipers in the very short run.)

A. The price decreases and the quantity demanded decreases.

B. The price increases and the quantity demanded increases.

C. The price increases and the quantity demanded decreases.

D. The price decreases and the quantity demanded increases.

The following graph shows the market for bread in the Soviet Union, which was a command economy. Suppose that the central planners mandate a total production of 4,000 loaves of bread. They also fix the price at 30 rubles per loaf of bread.

The graphs are on this website:
http://www.myspace.com/superguy88jay

1. If the central planners fix the price of bread at 30 rubles, what is likely to occur?

I. A shortage of bread
II. A surplus of bread
III. Producers illegally selling bread at prices above 30 rubles per loaf
IV. Producers illegally selling bread at prices below 30 rubles per loaf

A. II and IV only

B. III and IV only

C. I, III, and IV only

D. I and III only

E. I and II only

2.
True or False: A decline in the demand for bread will always completely eliminate the shortage of bread.

True

False

3. The central planners suddenly change their minds. They issue a new mandate to produce 5,000 loaves of bread and to fix the price at 30 rubles per loaf of bread.

True or False: There is no shortage and no surplus of bread after the new mandate, assuming nothing else changes.

True

False

This question is based on the other graph!!!

4.
The following graph shows the initial market for windshield wipers in the Soviet Union, which was a command economy. Suppose that the central planners mandate a total production of 2,000 windshield wipers for all cars. They also fix the price at 20 rubles per windshield wiper.

The Soviet Union collapses and releases all price controls on all market goods, including windshield wipers. What should we expect to happen to the price and quantity of windshield wipers on the day after the collapse? (Assume there isn’t enough time for sellers to produce more windshield wipers in the very short run.)

A. The price decreases and the quantity demanded decreases.

B. The price increases and the quantity demanded increases.

C. The price increases and the quantity demanded decreases.

D. The price decreases and the quantity demanded increases.

6. Fill in the blank for the following statement.

________ determine(s) what to produce, how to produce, and for whom to produce in a market economy.

A. Interactions between supply and demand

B. A dictator or group of central planners

C. Cultural customs

Predict or tell me the changes in train ridership over a one month period(short run) and a five year period ( long run)?

Over the one-month period , will total revenue increase or decrease? what will happen in the five year period.?

Use the Price elasticity of Demand Elasticity of demand= Percentage change in quantity demanded/(diveded by) percentage change in price.