Question 1

If the government institutes a specific tax for a good that has a perfectly elastic demand curve

Accepted Answer

A)  the producer simply passes the entire tax on to the consumer. 
B)  the producer must absorb the entire tax. 
C)  the producer can generally only pass part of the tax onto the consumer. 
D)  the equilibrium price drops. 
A)  the producer simply passes the entire tax on to the consumer. 
B)  the producer must absorb the entire tax. 
C)  the producer can generally only pass part of the tax onto the consumer. 
D)  the equilibrium price drops.

Question 2

If the government places a $1500 tax on each hybrid car sold

Accepted Answer

A)  consumers will stop buying hybrid cars. 
B)  the supply curve will shift left by up to $1500, depending on the price elasticity of demand. 
C)  the supply curve will shift to the right by $1500. 
D)  None of the above. 
A)  consumers will stop buying hybrid cars. 
B)  the supply curve will shift left by up to $1500, depending on the price elasticity of demand. 
C)  the supply curve will shift to the right by $1500. 
D)  None of the above.

Question 3

A competitive equilibrium is described by

Accepted Answer

A)  a price only. 
B)  a quantity only. 
C)  the excess supply minus the excess demand. 
D)  a price and a quantity. 
A)  a price only. 
B)  a quantity only. 
C)  the excess supply minus the excess demand. 
D)  a price and a quantity.

Question 4

It is appropriate to use the supply-and-demand model in which of the following markets?

Accepted Answer

A)  beer market 
B)  wine market 
C)  real estate market 
D)  market for gourmet pizza 
A)  beer market 
B)  wine market 
C)  real estate market 
D)  market for gourmet pizza

Question 5

Which of the following is NOT a characteristic of perfectly competitive markets?

Accepted Answer

A)  There is free entry and exit. 
B)  All market participants are price-takers. 
C)  It is hard to find a trading partner. 
D)  All products are identical. 
A)  There is free entry and exit. 
B)  All market participants are price-takers. 
C)  It is hard to find a trading partner. 
D)  All products are identical.

Question 6

If pizza and tacos are substitutes,a decrease in the price of tacos would lead to a

Accepted Answer

A)  decrease in the demand curve for pizza. 
B)  decrease in the quantity demanded of pizza. 
C)  decrease in the price of pizza. 
D)  All of the above. 
A)  decrease in the demand curve for pizza. 
B)  decrease in the quantity demanded of pizza. 
C)  decrease in the price of pizza. 
D)  All of the above.

Question 7

Explain why the equilibrium price is called the market clearing price.

Accepted Answer

At the equilibrium price,selle

Question 8

To determine the total demand for all consumers,sum the quantity each consumer demands

Accepted Answer

A)  at a given price. 
B)  at all prices and then sum this amount across all consumers. 
C)  Both A and B will generate the same total demand. 
D)  None of the above. 
A)  at a given price. 
B)  at all prices and then sum this amount across all consumers. 
C)  Both A and B will generate the same total demand. 
D)  None of the above.

Question 9

A price ceiling that is set above the equilibrium price

Accepted Answer

A)  causes suppliers to raise their prices. 
B)  is binding. 
C)  is non-binding. 
D)  creates a shortage. 
A)  causes suppliers to raise their prices. 
B)  is binding. 
C)  is non-binding. 
D)  creates a shortage.

Question 10

Which of the following is NOT possible according to the law of demand?

Accepted Answer

A)  A horizontal demand curve 
B)  A vertical demand curve 
C)  A downward-sloping supply curve 
D)  An upward-sloping demand curve 
A)  A horizontal demand curve 
B)  A vertical demand curve 
C)  A downward-sloping supply curve 
D)  An upward-sloping demand curve

Question 11

The expression "increase in quantity supplied" is illustrated graphically as a

Accepted Answer

A)  leftward shift in the supply curve. 
B)  rightward shift in the supply curve. 
C)  movement up along the supply curve. 
D)  movement down along the supply curve. 
A)  leftward shift in the supply curve. 
B)  rightward shift in the supply curve. 
C)  movement up along the supply curve. 
D)  movement down along the supply curve.

Question 12

If Qs = -20 + 10p,and Qd = 400 - 20p,what is the equilibrium quantity?

Accepted Answer

A)  440 
B)  146.6 
C)  360 
D)  120 
A)  440 
B)  146.6 
C)  360 
D)  120

Question 13

It is appropriate to use the supply-and-demand model in which of the following markets?

Accepted Answer

A)  beer market 
B)  car market 
C)  wheat market 
D)  market for breakfast cereal 
A)  beer market 
B)  car market 
C)  wheat market 
D)  market for breakfast cereal

Question 14

An increase in consumer incomes will lead to

Accepted Answer

A)  a rightward shift of the demand curve for plasma TVs. 
B)  a movement upward along the demand curve for plasma TVs. 
C)  a rightward shift of the supply curve for plasma TVs. 
D)  no change of the demand curve for plasma TVs. 
A)  a rightward shift of the demand curve for plasma TVs. 
B)  a movement upward along the demand curve for plasma TVs. 
C)  a rightward shift of the supply curve for plasma TVs. 
D)  no change of the demand curve for plasma TVs.

Question 15

Which of the following is NOT a characteristic of perfectly competitive markets?

Accepted Answer

A)  The government restricts the number of producers through licensing requirements. 
B)  All market participants are price-takers. 
C)  It is easy to find a trading partner. 
D)  All products are identical. 
A)  The government restricts the number of producers through licensing requirements. 
B)  All market participants are price-takers. 
C)  It is easy to find a trading partner. 
D)  All products are identical.

Question 16

-The above figure shows a graph of the market for pizzas in a large town.Suppose that concern over dietary habits has led the government to impose a restriction that limits suppliers to produce no more than 40 pizzas.What will the price of pizza be as a result of this quota?

Accepted Answer

A)  $2 
B)  $7 
C)  $8 
D)  $10 
A)  $2 
B)  $7 
C)  $8 
D)  $10

Question 17

If a demand curve shifts left,it implies

Accepted Answer

A)  as a group, consumers are willing and able to pay less for the product. 
B)  as a group, consumers are willing and able to pay more for the product. 
C)  government has regulated how many people can purchase the product. 
D)  the profit motive of the firms is making the price too high. 
A)  as a group, consumers are willing and able to pay less for the product. 
B)  as a group, consumers are willing and able to pay more for the product. 
C)  government has regulated how many people can purchase the product. 
D)  the profit motive of the firms is making the price too high.

Question 18

If the government institutes a specific tax for a good that has a perfectly inelastic demand curve

Accepted Answer

A)  the producer simply passes the entire tax on to the consumer. 
B)  the producer must absorb the entire tax. 
C)  the producer can generally only pass part of the tax onto the consumer. 
D)  the equilibrium price drops. 
A)  the producer simply passes the entire tax on to the consumer. 
B)  the producer must absorb the entire tax. 
C)  the producer can generally only pass part of the tax onto the consumer. 
D)  the equilibrium price drops.

Question 19

A rightward shift of the supply curve will lead to a(n)

Accepted Answer

A)  decrease in equilibrium price. 
B)  excess supply at the old equilibrium price. 
C)  increase in quantity demanded. 
D)  All of the above. 
A)  decrease in equilibrium price. 
B)  excess supply at the old equilibrium price. 
C)  increase in quantity demanded. 
D)  All of the above.

Question 20

A rightward shift of the demand curve will lead to a(n)

Accepted Answer

A)  increase in equilibrium price. 
B)  excess demand at the old equilibrium price. 
C)  increase in quantity supplied. 
D)  All of the above. 
A)  increase in equilibrium price. 
B)  excess demand at the old equilibrium price. 
C)  increase in quantity supplied. 
D)  All of the above.

If the government institutes a specific tax for a good that has a perfectly elastic demand curve

If the government places a $1500 tax on each hybrid car sold

A competitive equilibrium is described by

It is appropriate to use the supply-and-demand model in which of the following markets?

Which of the following is NOT a characteristic of perfectly competitive markets?

If pizza and tacos are substitutes,a decrease in the price of tacos would lead to a

Explain why the equilibrium price is called the market clearing price.

To determine the total demand for all consumers,sum the quantity each consumer demands

A price ceiling that is set above the equilibrium price

Which of the following is NOT possible according to the law of demand?

The expression "increase in quantity supplied" is illustrated graphically as a

If Qs = -20 + 10p,and Qd = 400 - 20p,what is the equilibrium quantity?

It is appropriate to use the supply-and-demand model in which of the following markets?

An increase in consumer incomes will lead to

Which of the following is NOT a characteristic of perfectly competitive markets?

-The above figure shows a graph of the market for pizzas in a large town.Suppose that concern over dietary habits has led the government to impose a restriction that limits suppliers to produce no more than 40 pizzas.What will the price of pizza be as a result of this quota?

If a demand curve shifts left,it implies

If the government institutes a specific tax for a good that has a perfectly inelastic demand curve

A rightward shift of the supply curve will lead to a(n)

A rightward shift of the demand curve will lead to a(n)

Introduction

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 2: Supply and Demand

If the government institutes a specific tax for a good that has a perfectly elastic demand curve

If the government places a $1500 tax on each hybrid car sold

A competitive equilibrium is described by

It is appropriate to use the supply-and-demand model in which of the following markets?

Which of the following is NOT a characteristic of perfectly competitive markets?

If pizza and tacos are substitutes,a decrease in the price of tacos would lead to a

Explain why the equilibrium price is called the market clearing price.

To determine the total demand for all consumers,sum the quantity each consumer demands

A price ceiling that is set above the equilibrium price

Which of the following is NOT possible according to the law of demand?

The expression "increase in quantity supplied" is illustrated graphically as a

If Qs = -20 + 10p,and Qd = 400 - 20p,what is the equilibrium quantity?

It is appropriate to use the supply-and-demand model in which of the following markets?

An increase in consumer incomes will lead to

Which of the following is NOT a characteristic of perfectly competitive markets?

-The above figure shows a graph of the market for pizzas in a large town.Suppose that concern over dietary habits has led the government to impose a restriction that limits suppliers to produce no more than 40 pizzas.What will the price of pizza be as a result of this quota?

If a demand curve shifts left,it implies

If the government institutes a specific tax for a good that has a perfectly inelastic demand curve

A rightward shift of the supply curve will lead to a(n)

A rightward shift of the demand curve will lead to a(n)

Introduction

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters