Question 1

How is the "Law of Demand" different from the "Law of Supply"? In what ways are they similar to each other?

Accepted Answer

The Law of Demand describes the behavior

Question 2

Refer to the graph shown. Suppose that at a price of $5.00, firm A is willing and able to supply 4 units and firm B is willing and able to supply 4 units. Which of the following statements is then true?

Accepted Answer

A) Curve S0 shows the quantity supplied of firm A and firm B combined. 
B) Curve S1 shows the quantity supplied of firm A and firm B combined. 
C) The addition of firm B to the market causes a movement upward and to the right along S0. 
D) The addition of firm B to the market causes a movement upward and to the right along S1. 
A) Curve S0 shows the quantity supplied of firm A and firm B combined. 
B) Curve S1 shows the quantity supplied of firm A and firm B combined. 
C) The addition of firm B to the market causes a movement upward and to the right along S0. 
D) The addition of firm B to the market causes a movement upward and to the right along S1.

Question 3

What are normal goods? What are inferior goods? Give an example of each type.

Accepted Answer

A normal good is a good whose demand var

Question 4

When the wage rate paid to labor is above equilibrium, the:

Accepted Answer

A) supply of labor increases. 
B) demand for labor decreases. 
C) number of workers seeking jobs exceeds the number of jobs available. 
D) number of jobs available exceeds the number of workers seeking jobs. 
A) supply of labor increases. 
B) demand for labor decreases. 
C) number of workers seeking jobs exceeds the number of jobs available. 
D) number of jobs available exceeds the number of workers seeking jobs.

Question 5

Explain the following statement: "The invisible hand pushing toward a supply/demand equilibrium would be thwarted by social and political forces pushing in the other direction." Give examples of the social force and political force that the statement refers to.

Accepted Answer

The term equilibrium that is used in an

Question 6

Moore's Law states that the processing power of the latest computer chips doubles about every eighteen months. Assuming the graphs demonstrate the market for the latest computer chips, which of the following diagrams describe this situation?

Accepted Answer

A) Graph a 
B) Graph b 
C) Graph c 
D) Graph d 
A) Graph a 
B) Graph b 
C) Graph c 
D) Graph d

Question 7

Demonstrate graphically and explain verbally the concept of excess demand.Is price above or below equilibrium?

Accepted Answer

Excess demand refers to situations where

Question 8

Suppose that the table shown shows the demand and supply schedules for pork bellies. Based on the table, the equilibrium price of pork bellies is: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (\$/lb.) }
\end{array} & \text { Quantity demanded (lbs.) } & \text { Quantity Supplied (lbs.) } \
\hline \$ 0.10 & 30,000 & 5,000 \
\hline \$ 0.20 & 25,000 & 10,000 \
\hline \$ 0.50 & 20,000 & 20,000 \
\hline \$ 0.75 & 15,000 & 30,000 \
\hline \$ 0.95 & 5,000 & 40,000 \
\hline
\end{array}$$

Accepted Answer

A) $0.10/lb. 
B) $0.25/lb. 
C) $0.50/lb. 
D) $0.75/lb. 
A) $0.10/lb. 
B) $0.25/lb. 
C) $0.50/lb. 
D) $0.75/lb.

Question 9

Refer to the graphs showing the demand for music downloads. The effect of an increase in the price of music downloads on consumers is best shown by arrow:

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 10

The false assumption that what is true for a part will also be true for the whole is called the:

Accepted Answer

A) fallacy of composition. 
B) paradox of thrift. 
C) post hoc fallacy. 
D) ceteris paribus assumption. 
A) fallacy of composition. 
B) paradox of thrift. 
C) post hoc fallacy. 
D) ceteris paribus assumption.

Question 11

Consider the following supply table,which represents the supply of comic books by Bill,Judy,and Sally. $$\begin{array} { | l | r | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Price } \
\text { (in \$) }
\end{array} & \begin{array} { c } 
\text { Bill's } \
\text { Supply }
\end{array} & \begin{array} { c } 
\text { Judy's } \
\text { Supply }
\end{array} & \begin{array} { c } 
\text { Sally's } \
\text { Supply }
\end{array} & \begin{array} { c } 
\text { Market } \
\text { Supply }
\end{array} \
\hline \text { A } & \$ 2 & 0 & 9 & 1 & \
\hline \text { B } & 4 & 0 & 2 & 2 & \
\hline \text { C } & 6 & 0 & 4 & 3 & \
\hline \text { D } & 8 & 0 & 5 & 4 & \
\hline \text { E } & 10 & 0 & 6 & 5 & \
\hline \text { F } & 12 & 0 & 7 & 6 & \
\hline \text { G } & 14 & 2 & 8 & 6 & \
\hline \text { H } & 16 & 4 & 10 & 6 & \
\hline
\end{array}$$ (a)Fill in the "market supply" column of the above table.
(b)Use the grid below to draw the supply curves for comic books of Bill,Judy,and Sally.Then draw in the market supply curve.   (c)Compare the supply curve you have drawn for Sally and Judy.Which of these two is more influenced by increases in the price of comic books? Explain.

Accepted Answer

(a)To fill in the "market supply" column

Question 12

Which of the following would be expected to cause an increase in the supply of desktops?

Accepted Answer

A) An increase in the number of business firms demanding desktops 
B) An increase in the price of desktops 
C) A decrease in the cost of manufacturing desktops 
D) The expectation that the price of desktops will increase in future 
A) An increase in the number of business firms demanding desktops 
B) An increase in the price of desktops 
C) A decrease in the cost of manufacturing desktops 
D) The expectation that the price of desktops will increase in future

Question 13

Demonstrate graphically and explain the difference between an increase in the quantity demanded and an increase in demand.Describe what might have caused each to occur.

Accepted Answer

An increase in the quantity demanded ref

Question 14

A change in the price of carrots will cause a movement along the demand curve for carrots and a shift in the demand for substitute vegetables.

Accepted Answer

A) True 
 B)False

Question 15

What are the "other things constant" when drawing a demand curve? What are the "other things constant" when drawing a supply curve?

Accepted Answer

In the case of the demand curve,the list

Question 16

The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes:

Accepted Answer

A) up, the quantity demanded also goes up. 
B) up, the quantity demanded goes down. 
C) down, the quantity demanded goes down. 
D) down, the quantity demanded stays the same. 
A) up, the quantity demanded also goes up. 
B) up, the quantity demanded goes down. 
C) down, the quantity demanded goes down. 
D) down, the quantity demanded stays the same.

Question 17

If market supply increases, equilibrium price will:

Accepted Answer

A) fall and demand will shift to the right. 
B) fall, causing a movement along the demand curve. 
C) rise and demand will shift to the left. 
D) rise, causing a movement along the demand curve. 
A) fall and demand will shift to the right. 
B) fall, causing a movement along the demand curve. 
C) rise and demand will shift to the left. 
D) rise, causing a movement along the demand curve.

Question 18

The distinction between supply and the quantity supplied is best made by saying that:

Accepted Answer

A) the quantity supplied is represented graphically by a curve and supply as a point on that curve. 
B) supply is represented graphically by a curve and quantity supplied as a point on that curve. 
C) the quantity supplied is in a direct relation with prices, whereas supply is in an inverse relation. 
D) the quantity supplied is in an inverse relation with prices, whereas supply is in a direct relation. 
A) the quantity supplied is represented graphically by a curve and supply as a point on that curve. 
B) supply is represented graphically by a curve and quantity supplied as a point on that curve. 
C) the quantity supplied is in a direct relation with prices, whereas supply is in an inverse relation. 
D) the quantity supplied is in an inverse relation with prices, whereas supply is in a direct relation.

Question 19

The following graph shows the supply of movie downloads. If price changes from $0.50 to $2.00, what will be the change in the market quantity supplied?

Accepted Answer

A) 1 movie per week 
B) 6 movie per week 
C) 7 movie per week 
D) 8 movie per week 
A) 1 movie per week 
B) 6 movie per week 
C) 7 movie per week 
D) 8 movie per week

Question 20

Use examples to demonstrate why the ability of consumers and producers to substitute explains the behavior that we call the "Law of Demand" and the "Law of Supply"?

Accepted Answer

The law of demand is based on an individ

Exam 4: Supply and Demand

How is the "Law of Demand" different from the "Law of Supply"? In what ways are they similar to each other?

Refer to the graph shown. Suppose that at a price of $5.00, firm A is willing and able to supply 4 units and firm B is willing and able to supply 4 units. Which of the following statements is then true?

What are normal goods? What are inferior goods? Give an example of each type.

When the wage rate paid to labor is above equilibrium, the:

Explain the following statement: "The invisible hand pushing toward a supply/demand equilibrium would be thwarted by social and political forces pushing in the other direction." Give examples of the social force and political force that the statement refers to.

Moore's Law states that the processing power of the latest computer chips doubles about every eighteen months. Assuming the graphs demonstrate the market for the latest computer chips, which of the following diagrams describe this situation?

Demonstrate graphically and explain verbally the concept of excess demand.Is price above or below equilibrium?

Refer to the graphs showing the demand for music downloads. The effect of an increase in the price of music downloads on consumers is best shown by arrow:

The false assumption that what is true for a part will also be true for the whole is called the:

Which of the following would be expected to cause an increase in the supply of desktops?

Demonstrate graphically and explain the difference between an increase in the quantity demanded and an increase in demand.Describe what might have caused each to occur.

A change in the price of carrots will cause a movement along the demand curve for carrots and a shift in the demand for substitute vegetables.

What are the "other things constant" when drawing a demand curve? What are the "other things constant" when drawing a supply curve?

The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes:

If market supply increases, equilibrium price will:

The distinction between supply and the quantity supplied is best made by saying that:

The following graph shows the supply of movie downloads. If price changes from $0.50 to $2.00, what will be the change in the market quantity supplied?

Use examples to demonstrate why the ability of consumers and producers to substitute explains the behavior that we call the "Law of Demand" and the "Law of Supply"?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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