Question 1

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:

Accepted Answer

A)   $15.
B)   $19.
C)   $17.
D)   $20.E) All of the above
F) A) and B)

Question 2

Suppose both supply and demand decrease. What effect will this have on price?

Accepted Answer

A)   It will fall.
B)   It will rise.
C)   It may rise or fall.
D)   It will remain the same.E) A) and B)
F) A) and C)

Question 3

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Accepted Answer

A)   holding only input price fixed.
B)   allowing input price to vary.
C)   holding all supply shifters fixed.
D)   allowing all supply shifters to vary.E) A) and B)
F) A) and C)

Question 4

An ad valorem tax shifts the supply curve

Accepted Answer

A)   down by the amount of the tax.
B)   up by the amount of the tax.
C)   by rotating it counter-clockwise.
D)   by rotating it clockwise.E) A) and B)
F) A) and C)

Question 5

Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

Accepted Answer

A)   decrease by $20,000.
B)   decrease by $100,000.
C)   increase by $100,000.
D)   increase by $20,000.E) B) and C)
F) A) and D)

Question 6

Other things held constant, the lower the price of a good

Accepted Answer

A)   the lower the demand.
B)   the higher the demand.
C)   the greater the consumer surplus.
D)   the lower the consumer surplus.E) B) and C)
F) All of the above

Question 7

Which of the following is probably not a normal good?

Accepted Answer

A)   Designer jeans.
B)   Diamond rings.
C)   Intercity passenger bus travel.
D)   New automobiles.E) A) and D)
F) B) and D)

Question 8

An inferior good is a good

Accepted Answer

A)   that has low quality.
B)   that consumers purchase less of when their incomes are higher.
C)   that consumers purchase more when their incomes are higher.
D)   of high quality.E) All of the above
F) B) and C)

Question 9

You are the manager of Fast & Easy Donuts. Almost all of your donut sales are derived from the drive-through window. You know from experience that coffee is a complement for your donuts. The morning newspaper says that a major storm has just destroyed 50 percent of this year's coffee bean crop. Will this affect how much flour you order? Will it affect how many employees you schedule? What will happen to prices?

Accepted Answer

Destruction of 50% of this year's coffee...

Question 10

The buyer side of the market is known as the:

Accepted Answer

A)   income side.
B)   demand side.
C)   supply side.
D)   seller side.E) A) and D)
F) None of the above

Question 11

The maximum legal price that can be charged in a market is:

Accepted Answer

A)   a price floor.
B)   an ad valorem tax.
C)   the market equilibrium price.
D)   a price ceiling.E) A) and B)
F) A) and C) D

Question 12

Under a price ceiling, the full economic price is

Accepted Answer

A)   the dollar price paid to the firm.
B)   the opportunity cost of not being able to buy a good when a consumer needs it.
C)   lower than the free-market price.
D)   higher than the free-market price.E) A) and B)
F) A) and C)

Question 13

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

Accepted Answer

A)   PX = 500 - 2QX - 3PY + 0.01M.
B)   PX = 335 - 0.5QX.
C)   PX = 335 - 2QX.
D)   PX = 500 - 2QX.E) B) and C)
F) A) and D)

Question 14

Russian state television has imposed a temporary ban on all TV commercials. Your firm specializes in exports to Russia. 90 percent of its sales consist of consumer goods shipped to Russia. Your supervisor wants to know the likely impact of the ban on your firm's operations. What do you tell her?

Accepted Answer

A ban on advertising will like...

Question 15

Consider a market characterized by the following demand and supply conditions: PX = 15 - 2QX and PX = 3 + 2QX. The equilibrium price and quantity are, respectively,

Accepted Answer

A)   $3 and 9 units.
B)   $9 and 3 units.
C)   $12 and 4 units.
D)   $4 and 12 units.E) A) and B)
F) None of the above B

Question 16

If a shortage exists in a market, the natural tendency is for:

Accepted Answer

A)   demand to increase.
B)   price to increase.
C)   quantity supplied to decrease.
D)   no change in the market.E) B) and C)
F) A) and D)

Question 17

All else held constant, as additional firms enter an industry

Accepted Answer

A)   more output is available at each given price.
B)   less output is available at each given price.
C)   the same output is available at each given price.
D)   output could increase or decrease at each given price.E) A) and B)
F) A) and C)

Question 18

Changes in the price of a good lead to:

Accepted Answer

A)   changes in the quantity supplied of the good.
B)   changes in supply.
C)   changes in demand.
D)   no effects in quantity supplied or demanded.E) None of the above
F) A) and D)

Question 19

Consumer surplus is

Accepted Answer

A)   the value consumers get from a supplier.
B)   the value consumers do not pay because of a discount by supplier.
C)   the value consumers get from a good but do not pay for.
D)   equal to the amount consumers pay for a good.E) A) and B)
F) All of the above C

Question 20

Which of the following pairs of goods are probably complements?

Accepted Answer

A)   Electricity and natural gas.
B)   Butter and margarine.
C)   Steak and chicken.
D)   Ketchup and French fries.E) All of the above
F) None of the above

Exam 2: Market Forces: Demand and Supply

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P. The equilibrium price is:

Correct Answer
verified

Suppose both supply and demand decrease. What effect will this have on price?

Correct Answer
verified

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Correct Answer
verified

An ad valorem tax shifts the supply curve

Correct Answer
verified

Suppose the demand for X is given by Q_x^d = 100 - 2P_X + 4P_Y + 10M + 2A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

Correct Answer
verified

Other things held constant, the lower the price of a good

Correct Answer
verified

Which of the following is probably not a normal good?

Correct Answer
verified

An inferior good is a good

Correct Answer
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Correct Answer
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Destruction of 50% of this year's coffee...
View Answer

The buyer side of the market is known as the:

Correct Answer
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The maximum legal price that can be charged in a market is:

Correct Answer
verified
D

Under a price ceiling, the full economic price is

Correct Answer
verified

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Correct Answer
verified

Russian state television has imposed a temporary ban on all TV commercials. Your firm specializes in exports to Russia. 90 percent of its sales consist of consumer goods shipped to Russia. Your supervisor wants to know the likely impact of the ban on your firm's operations. What do you tell her?

Correct Answer
verified
A ban on advertising will like...
View Answer

Consider a market characterized by the following demand and supply conditions: P_X = 15 - 2Q_X and P_X = 3 + 2Q_X. The equilibrium price and quantity are, respectively,

Correct Answer
verified
B

If a shortage exists in a market, the natural tendency is for:

Correct Answer
verified

All else held constant, as additional firms enter an industry

Correct Answer
verified

Changes in the price of a good lead to:

Correct Answer
verified

Consumer surplus is

Correct Answer
verified
C

Which of the following pairs of goods are probably complements?

Correct Answer
verified

Exam 2: Market Forces: Demand and Supply

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:

Correct AnswerverifiedShow Answer

Suppose both supply and demand decrease. What effect will this have on price?

Correct AnswerverifiedShow Answer

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Correct AnswerverifiedShow Answer

An ad valorem tax shifts the supply curve

Correct AnswerverifiedShow Answer

Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

Correct AnswerverifiedShow Answer

Other things held constant, the lower the price of a good

Correct AnswerverifiedShow Answer

Which of the following is probably not a normal good?

Correct AnswerverifiedShow Answer

An inferior good is a good

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDestruction of 50% of this year's coffee...View AnswerShow Answer

The buyer side of the market is known as the:

Correct AnswerverifiedShow Answer

The maximum legal price that can be charged in a market is:

Correct AnswerverifiedD

Under a price ceiling, the full economic price is

Correct AnswerverifiedShow Answer

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

Correct AnswerverifiedShow Answer

Russian state television has imposed a temporary ban on all TV commercials. Your firm specializes in exports to Russia. 90 percent of its sales consist of consumer goods shipped to Russia. Your supervisor wants to know the likely impact of the ban on your firm's operations. What do you tell her?

Correct AnswerverifiedA ban on advertising will like...View AnswerShow Answer

Consider a market characterized by the following demand and supply conditions: PX = 15 - 2QX and PX = 3 + 2QX. The equilibrium price and quantity are, respectively,

Correct AnswerverifiedB

If a shortage exists in a market, the natural tendency is for:

Correct AnswerverifiedShow Answer

All else held constant, as additional firms enter an industry

Correct AnswerverifiedShow Answer

Changes in the price of a good lead to:

Correct AnswerverifiedShow Answer

Consumer surplus is

Correct AnswerverifiedC

Which of the following pairs of goods are probably complements?

Correct AnswerverifiedShow Answer

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P. The equilibrium price is:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose the demand for X is given by Q_x^d = 100 - 2P_X + 4P_Y + 10M + 2A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Destruction of 50% of this year's coffee...
View Answer

Correct Answer
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Correct Answer
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D

Correct Answer
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Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Correct Answer
verified

Correct Answer
verified
A ban on advertising will like...
View Answer

Consider a market characterized by the following demand and supply conditions: P_X = 15 - 2Q_X and P_X = 3 + 2Q_X. The equilibrium price and quantity are, respectively,

Correct Answer
verified
B

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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