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1. Which question is an example of a microeconomic question?

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B. Will the merger of two airlines likely lead to higher airline ticket prices?

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2. Which is not a factor of production?

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A. Money

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3. A point on the production possibilities curve is:

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A. Attainable and resources are fully employed

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4. Which would not be characteristic of a capitalist economy?

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A. Government ownership of most factors of production

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(5) Which is an illustration of a macroeconomic question?

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B. Are increasing wage demands by workers contributing to price inflation?

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In the circular flow model, households earn their incomes in the:

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(A.) Resource markets

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Which is not a determinant of a change in demand?

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(B.) The cost of inputs in production

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(8) If the price of gasoline increases and car dealers suffer a decrease in demand for sport utility vehicles, then gasoline and sport utility vehicles are:

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(B.) Complements

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(10) Refer to the above diagram, which shows three supply curves for corn. Which of the following would cause the change in the supply of corn illustrated by the shift from S1 to S2?

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(D.) The development of a more effective insecticide for corn rootworm

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All of the following statements describe a market economy except:

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(A.) Government prescribes the desired prices for goods and services

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When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

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(A.) The substitution effect.

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A recent study found that an increase in the federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that:

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(B. ) beer and marijuana are complementary goods.

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If two goods are complements:

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(C.) a decrease in the price of one will increase the demand for the other.

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Which of the following statements is correct?

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(A.) An increase in the price of C will decrease the demand for complementary product D.

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A decrease in the price of digital cameras will: (Remember memory cards are used with digital cameras)

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(B.) shift the demand curve for memory cards to the right.

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Which of the following is one of the Five Fundamental Questions?

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(D.) What goods and services will be produced?

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Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates:

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(B.) opportunity costs.

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Macroeconomics approaches the study of economics from the viewpoint of

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(A.) the entire economy.

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Which of the following statements pertains to macroeconomics?

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(C.) National income grew by 2.7 percent last year.

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An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:

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(D.) bicycles are normal goods.

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Which of the following will cause the demand curve for product A to shift to the left?

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(D.) An increase in money income if A is an inferior good.

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Which of the following would most likely increase the demand for gasoline?

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(A.) The expectation by consumers that gasoline prices will be higher in the future.

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Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to:

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(B.) reduce the demand for soda and increase the demand for tacos.

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The law of supply indicates that, other things equal:

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(A.) producers will offer more of a product at high prices than at low prices.

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An improvement in production technology will:

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(C.) shift the supply curve to the right.

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The supply curve shows the relationship between:

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(A.) price and quantity supplied.

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The income and substitution effects account for:

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(B.) the downward-sloping demand curve.

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The Latin term "ceteris paribus" means

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(C.) other things equal.

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Which of the following is associated with macroeconomics?

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(B.) An empirical investigation of the general price level and unemployment rates since 1990.

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A production possibilities curve shows:

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(C.) the maximum amounts of two goods that can be produced, assuming the full use of available resources.

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Answer the question on the basis of the data given in the following production possibilities table: Prod. poss. (alternatives) A / B / C / D / E / F Capital Goods 5 4 3 2 1 0 Consumer Gds 0 5 9 12 14 15 Refer to the table. If the economy is producing at production alternative C, the opportunity cost of the twelfth unit of consumer goods will be:

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(D.) 1/3 of a unit of capital goods

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In a command system:

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(C.) The government makes production and allocation decisions

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In the circular flow diagram, firms get their ability to pay for the costs of production from the:

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(A.) Revenues they receive for their products

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The circular flow model shows that workers and capital-owners offer their services to firms through the:

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(B.) Resource markets

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Which of the following would be primarily determined in the resource markets?

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(B.) The wage rates for computer programmers and engineers

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All of the following statements describe a market economy except:

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(A.) Government prescribes the desired prices for goods and services

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The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

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(A.) direct; inverse

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College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

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(A.) inferior goods.

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A person should consume more of something when its marginal:

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(A.) benefit exceeds its marginal cost.

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In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of:

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(A.) scarcity and opportunity costs.

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A recent study found that an increase in the federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that:

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(B.) beer and marijuana are complementary goods.

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Which of the following is a positive statement?

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(C.) The temperature is 92 degrees today.

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Real GDP in 2008 was $14,834 billion. Real GDP in 2009 was $14,418 billion. The percentage change in real GDP from 2008 to 2009 was:

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A. 5% B. 3.7% C. 2.0% D. 2.8%

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Comparative advantage is

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(C.) the ability to produce more a good or service at a lower opportunity cost than others

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One can say with certainty that equilibrium price will decline when supply

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(B.) increases and demand decreases.

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Since their introduction, prices of Blu-ray players have fallen and the quantity purchased has increased. This statement:

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(A.) suggests that the supply of Blu-ray players has increased.

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When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes:

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(D.) the income effect.

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A price ceiling means that:

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(B.) government is imposing a legal price that is typically below the equilibrium price.

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If a legal ceiling price is set above the equilibrium price:

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(B.) a surplus of the product will occur.

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Quantity Quantity Demanded Price Supplied -------------------------------------------------------- 52 $50 73 62 $45 62 72 $40 51 82 $35 42 92 $30 33 If government set a maximum price of $45 in the market:

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(D.) it would create neither a shortage nor a surplus.

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An effective price floor on wheat will:

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(C.) result in a surplus of wheat.

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The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is:

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(C.) The consumer surplus

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The difference between the actual price that a producer receives and the minimum acceptable price a producer is willing to accept is:

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(B.) The producer surplus

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If property rights are not well enforced, fewer goods and services will be produced.

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(A.) True

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The area of the triangle shown in the figure below is:

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(C.) 22,500

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(1) US economy is on the verge of relapsing to a Great Depression era positive or normative

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Normative

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Bureau of Economic Analysis projects a growth of real GDP by 2.3% in the second quarter of 2015 ] positive or normative

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Positive

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Students of NSU entering the job market should be well versed with the current labor market conditions of Oklahoma positive or normative

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Normative

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The price of Starbucks coffee is too high positive or normative

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Normative

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A 50 cent per pack tax on cigarettes will lead to a 12 per cent reduction in smoking by teenagers positive or normative

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Positive

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(a) An unexpected freeze in Florida reduced the citrus crop production and caused the price of oranges to rise micro or macro

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Micro

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(b) Wells Fargo Bank lowered its interest rate on business loans by one half micro or macro

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Micro

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(c) CPI rose by 2.7% from Dec 2008 to Dec 2009 micro or macro

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Macro

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(d) Will the merger of two airlines likely lead to higher airline ticket prices? Micro or macro

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Micro

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(e) Are increasing wage demands by workers contributing to price inflation? micro or macro

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Macro

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State whether each of the following events will result in a movement along the demand curve or a shift of the demand curve for Mac hamburgers. If the curve shifts, indicate whether it shifts to the right or the left. (a) The price of Burger King's Whopper hamburger declines

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Burger King's hamburger may be considered as a substitute for McDonald's hamburger. So as the price of Burger King's hamburger falls, people will increase the quantity demanded of Burger King and reduce the demand for Mc Donald's burgers. This will shift the demand curve for Mac hamburgers to the left.

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State whether each of the following events will result in a movement along the demand curve or a shift of the demand curve for Mac hamburgers. If the curve shifts, indicate whether it shifts to the right or the left. (b) McDonald's distributes coupons for $1 off for the purchase of a Big Mac

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This will lead to an increase in the quantity demanded of Big Mac.

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State whether each of the following events will result in a movement along the demand curve or a shift of the demand curve for Mac hamburgers. If the curve shifts, indicate whether it shifts to the right or the left. (c) Because of a shortage of potatoes, the price of French fries increases

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French fries may be considered as a complement in the meal purchase with hamburgers. So in this case, lower quantity of French fries will be demanded and this will lead to a shift of the demand curve for Mac burgers to the left.

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State whether each of the following events will result in a movement along the demand curve or a shift of the demand curve for Mac hamburgers. If the curve shifts, indicate whether it shifts to the right or the left. (d) Fast food restaurants post nutrition labels

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This will reduce the demand for fast foods. So the demand for Mac burgers will go to the left.

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Briefly explain whether, each of the following statements describes a change in supply or a change in quantity supplied: (a) To take advantage of high prices for snow shovels during the winter, Alexander Shovels Inc., decides to increase output

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This is an example of the change in quantity supplied. As price falls, quantity supplied will increase.

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Briefly explain whether, each of the following statements describes a change in supply or a change in quantity supplied: (b) The success of the Apple iPhone leads more firms to begin producing smartphones

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This leads to rightward shift in the supply in the market for smartphones, as the number of firms selling smartphones increases.

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Briefly explain whether, each of the following statements describes a change in supply or a change in quantity supplied: (c) In the six months following the Japanese earthquake and tsunami in 2011, production of autos in Japan declined by 20%

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This is an example of techniques of production affecting the supply - there will be a shift of the supply curve to the left

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A student makes the following argument: "When the market is in equilibrium there is no consumer surplus. We know this, because in equilibrium, the market price is equal to the price consumers are willing to pay for the good." Briefly explain whether you agree with the student's argument

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No, because different consumers have different willingness to pay for a good. Even in market equilibrium, the difference between this maximum willingness to pay and the market price may be substantial. So consumer surplus exists.

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Under what circumstances will producer surplus equal the total revenue that firms receive from selling a product?

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This will happen when the producer's minimum willingness to accept the price for a product equals the equilibrium market price and there is no cost of producing the product. The revenue earned is the surplus for the producer.

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The cities of Peabody and Woburn are five miles apart. Woburn enacts a rent control law that puts a ceiling on rents well below their competitive market value. Predict the effect of this law on the competitive equilibrium rent in Peabody, which does not have rent control law

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The demand for housing in Peabody will increase because of the shortage created in Woburn. This will lead to an increase in the competitive equilibrium rent in Peabody, with supply of housing in Peabody remaining the same and other factors constant.

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