Question 1

Which of the following best describes a perfectly competitive market

Accepted Answer

A) A seller who charges more than the going price can increase her profit. 
B) If a seller charges more than the going price, buyers will go elsewhere. 
C) A seller often charges less than the going price to increase sales and profit. 
D) A buyer can influence the price of the product. 
A) A seller who charges more than the going price can increase her profit. 
B) If a seller charges more than the going price, buyers will go elsewhere. 
C) A seller often charges less than the going price to increase sales and profit. 
D) A buyer can influence the price of the product.

Question 2

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.What would result if the market price were $15

Accepted Answer

A) a shortage of 60 
B) a surplus of 60 
C) a surplus of 75 
D) a shortage of 75 
A) a shortage of 60 
B) a surplus of 60 
C) a surplus of 75 
D) a shortage of 75

Question 3

Market demand is given as Qd =300 - 2P.Market supply is given as QS = 2P + 100.What would result if the market price were $30

Accepted Answer

A) a shortage of 110 
B) a surplus of 110 
C) a surplus of 50 
D) a shortage of 80 
A) a shortage of 110 
B) a surplus of 110 
C) a surplus of 50 
D) a shortage of 80

Question 4

If suppliers expect the price of their product to fall in the future,what will they do

Accepted Answer

A) decrease supply now 
B) increase supply now 
C) increase supply in the future, but not now 
D) increase supply now and decrease it in the future 
A) decrease supply now 
B) increase supply now 
C) increase supply in the future, but not now 
D) increase supply now and decrease it in the future

Question 5

Market demand is QD = 200 - 6P.Market supply is QS = 4P.In a perfectly competitive equilibrium,what will be the price

Accepted Answer

A) $150 
B) $120 
C) $30 
D) $20 
A) $150 
B) $120 
C) $30 
D) $20

Question 6

Market demand is given as QD = 300 - 3P.Market supply is given as QS = 2P + 100.If price increases from $40 to $45,what is the price elasticity of demand

Accepted Answer

A) 0.4 
B) 0.8 
C) 1.3 
D) 1.8 
A) 0.4 
B) 0.8 
C) 1.3 
D) 1.8

Question 7

Market demand is given as QD = 120 - P.Market supply is given as QS = 4P.If price increases from $60 to $65,what is the price elasticity of demand

Accepted Answer

A) 0.1 
B) 0.9 
C) 1.1 
D) 2.1 
A) 0.1 
B) 0.9 
C) 1.1 
D) 2.1

Question 8

Market demand is given as QD = 140 - 5P.Market supply is given as QS = 2P.If price increases from $3 to $5,what is the price elasticity of demand

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.0 
D) 4.2 
A) 0.2 
B) 0.8 
C) 1.0 
D) 4.2

Question 9

If a decrease in income increases the demand for a good,what is the good called

Accepted Answer

A) a substitute good 
B) a complementary good 
C) a normal good 
D) an inferior good 
A) a substitute good 
B) a complementary good 
C) a normal good 
D) an inferior good

Question 10

Suppose donuts are currently selling for $10 per dozen.The equilibrium price of donuts is $12 per dozen.What would we expect

Accepted Answer

A) a shortage to exist and the market price of donuts to increase 
B) a shortage to exist and the market price of donuts to decrease 
C) a surplus to exist and the market price of donuts to increase 
D) a surplus to exist and the market price of donuts to decrease 
A) a shortage to exist and the market price of donuts to increase 
B) a shortage to exist and the market price of donuts to decrease 
C) a surplus to exist and the market price of donuts to increase 
D) a surplus to exist and the market price of donuts to decrease

Question 11

Suppose the equation Qd=(10-0.4D)-0.6P describes an individual's demand for iTunes content,with D being the price of the device needed to access iTunes content,in $100s.a) Draw the individual demand curve and show a person's quantity demanded when the price P is $8 and the price of the device is $600 (D=6).
b) If the market price P increased by $1 (so that the new price is P=$9),what should be the change in the price of the device (D) that would keep the quantity demanded the same as before
 Show these changes in a graph.
c) For the above question (b),identify which change(s) have determined a movement along the demand curve,and which have determined a shift in the demand curve.

Accepted Answer

a) The demand equation for D=6 is Qd=(10

Question 12

Surpluses drive price up while shortages drive price down.

Accepted Answer

A) True 
 B)False

Question 13

Smart phones are normal goods.What will happen to the equilibrium price and quantity of smart phones if phone plans become cheaper,more firms start producing smart phones,and
smart phone users experience an increase in income

Accepted Answer

A) price will fall and the effect on quantity is ambiguous 
B) price will rise and the effect on quantity is ambiguous 
C) quantity will fall and the effect on price is ambiguous 
D) quantity will rise and the effect on price is ambiguous 
A) price will fall and the effect on quantity is ambiguous 
B) price will rise and the effect on quantity is ambiguous 
C) quantity will fall and the effect on price is ambiguous 
D) quantity will rise and the effect on price is ambiguous

Question 14

Figure 4-4
  
-Refer to the Figure 4-4.If the price is $15,what would the quantity supplied be

Accepted Answer

A) 400 
B) 600 
C) 700 
D) 800 
A) 400 
B) 600 
C) 700 
D) 800

Question 15

Figure 4-6
  
-Refer to the Figure 4-6.What happens if the demand curve shifts from D to D₁

Accepted Answer

A) Firms would be willing to supply less than before. 
B) People are less willing to buy the product at any price than before. 
C) People are now more willing to buy the product at any price than before. 
D) The price of the product has decreased, causing consumers to buy more of the product. 
A) Firms would be willing to supply less than before. 
B) People are less willing to buy the product at any price than before. 
C) People are now more willing to buy the product at any price than before. 
D) The price of the product has decreased, causing consumers to buy more of the product.

Question 16

Currently you purchase six packages of hot dogs a month.You graduate in December and will start your new job on January 2.You have no plans to purchase hot dogs in January.What are hot dogs for you

Accepted Answer

A) a "college-only" good 
B) a normal good 
C) an inferior good 
D) a consumer good 
A) a "college-only" good 
B) a normal good 
C) an inferior good 
D) a consumer good

Question 17

Holding the other determinants of supply constant,what would a change in price do

Accepted Answer

A) result in a change in supply 
B) have no effect on the quantity supplied 
C) result in a shift of demand 
D) result in a movement along a stable supply curve 
A) result in a change in supply 
B) have no effect on the quantity supplied 
C) result in a shift of demand 
D) result in a movement along a stable supply curve

Question 18

Lead is an important input in the production of crystal.If the price of lead decreases,all else being equal,what would we expect

Accepted Answer

A) the supply of crystal to be unaffected 
B) the supply of crystal to decrease 
C) the supply of crystal to increase 
D) the supply of lead to increase 
A) the supply of crystal to be unaffected 
B) the supply of crystal to decrease 
C) the supply of crystal to increase 
D) the supply of lead to increase

Question 19

Kingston is a small university city in Ontario.What happens to the market demand curve for fast food in Kingston at the end of August each year

Accepted Answer

A) It shifts right. 
B) It shifts left. 
C) It remains constant, but moves down the curve. 
D) It remains constant, but moves up the curve. 
A) It shifts right. 
B) It shifts left. 
C) It remains constant, but moves down the curve. 
D) It remains constant, but moves up the curve.

Question 20

Given a fixed demand curve,which of the following is affected when the price changes

Accepted Answer

A) income 
B) tastes 
C) expectations 
D) quantity demanded 
A) income 
B) tastes 
C) expectations 
D) quantity demanded

Exam 4: The Market Forces of Supply and Demand

Which of the following best describes a perfectly competitive market

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.What would result if the market price were $15

Market demand is given as Qd =300 - 2P.Market supply is given as QS = 2P + 100.What would result if the market price were $30

If suppliers expect the price of their product to fall in the future,what will they do

Market demand is QD = 200 - 6P.Market supply is QS = 4P.In a perfectly competitive equilibrium,what will be the price

Market demand is given as QD = 300 - 3P.Market supply is given as QS = 2P + 100.If price increases from $40 to $45,what is the price elasticity of demand

Market demand is given as QD = 120 - P.Market supply is given as QS = 4P.If price increases from $60 to $65,what is the price elasticity of demand

Market demand is given as QD = 140 - 5P.Market supply is given as QS = 2P.If price increases from $3 to $5,what is the price elasticity of demand

If a decrease in income increases the demand for a good,what is the good called

Suppose donuts are currently selling for $10 per dozen.The equilibrium price of donuts is $12 per dozen.What would we expect

Surpluses drive price up while shortages drive price down.

Smart phones are normal goods.What will happen to the equilibrium price and quantity of smart phones if phone plans become cheaper,more firms start producing smart phones,and smart phone users experience an increase in income

Figure 4-4 -Refer to the Figure 4-4.If the price is $15,what would the quantity supplied be

Figure 4-6 -Refer to the Figure 4-6.What happens if the demand curve shifts from D to D₁

Currently you purchase six packages of hot dogs a month.You graduate in December and will start your new job on January 2.You have no plans to purchase hot dogs in January.What are hot dogs for you

Holding the other determinants of supply constant,what would a change in price do

Lead is an important input in the production of crystal.If the price of lead decreases,all else being equal,what would we expect

Kingston is a small university city in Ontario.What happens to the market demand curve for fast food in Kingston at the end of August each year

Given a fixed demand curve,which of the following is affected when the price changes

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Elasticity and Its Application

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Market demand is given as Q_D= 150 - P.Market supply is given as Q_S= 4P.What would result if the market price were $15

Market demand is given as Qd =300 - 2P.Market supply is given as Q_S= 2P + 100.What would result if the market price were $30

Market demand is Q_D= 200 - 6P.Market supply is Q_S= 4P.In a perfectly competitive equilibrium,what will be the price

Market demand is given as Q_D= 300 - 3P.Market supply is given as Q_S= 2P + 100.If price increases from $40 to $45,what is the price elasticity of demand

Market demand is given as Q_D= 120 - P.Market supply is given as Q_S= 4P.If price increases from $60 to $65,what is the price elasticity of demand

Market demand is given as Q_D= 140 - 5P.Market supply is given as Q_S= 2P.If price increases from $3 to $5,what is the price elasticity of demand