Question 1

The short-run elasticity of supply is less than the long-run elasticity of supply

Accepted Answer

A)  because consumers' tastes and preferences change in the long run but not in the short run. 
B)  because producers can adjust the amount of machinery in the long run but not in the short run. 
C)  only for durable goods. 
D)  only for non-durable goods. 
A)  because consumers' tastes and preferences change in the long run but not in the short run. 
B)  because producers can adjust the amount of machinery in the long run but not in the short run. 
C)  only for durable goods. 
D)  only for non-durable goods.

Question 2

A horizontal demand curve for a good could arise because consumers

Accepted Answer

A)  are irrational. 
B)  are not sensitive to price changes. 
C)  view this good as identical to another good. 
D)  have no equivalent substitutes for this good. 
A)  are irrational. 
B)  are not sensitive to price changes. 
C)  view this good as identical to another good. 
D)  have no equivalent substitutes for this good.

Question 3

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 4

In the case of a specific tax the resulting price received by producers depends on

Accepted Answer

A)  the tax rate. 
B)  the price elasticity of supply. 
C)  the price elasticity of demand. 
D)  All of the above. 
A)  the tax rate. 
B)  the price elasticity of supply. 
C)  the price elasticity of demand. 
D)  All of the above.

Question 5

If price is initially above the equilibrium level,

Accepted Answer

A)  the supply curve will shift rightward. 
B)  the supply curve will shift leftward. 
C)  excess supply exists. 
D)  all firms can sell as much as they want. 
A)  the supply curve will shift rightward. 
B)  the supply curve will shift leftward. 
C)  excess supply exists. 
D)  all firms can sell as much as they want.

Question 6

Consider the following products.Which of them has the flattest demand curve?

Accepted Answer

A)  insulin 
B)  alcohol 
C)  cigarettes 
D)  butter 
A)  insulin 
B)  alcohol 
C)  cigarettes 
D)  butter

Question 7

The National Association of Business Schools recently required that all business schools must hire three additional people with Ph.D.degrees in English literature.What is the immediate effect on the salaries of people with Ph.D.s in English literature? What will be the effect after ten years?

Accepted Answer

@#IMG-DLM& See the above figure.Initially,the quan

Question 8

If a government wants to maximize revenues from a tax,it should

Accepted Answer

A)  impose it on sellers. 
B)  impose it on consumers. 
C)  choose a good with a relatively elastic demand. 
D)  choose a good with a relatively inelastic demand. 
A)  impose it on sellers. 
B)  impose it on consumers. 
C)  choose a good with a relatively elastic demand. 
D)  choose a good with a relatively inelastic demand.

Question 9

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.If the price of wheat is $2,the price elasticity of demand

Accepted Answer

A)  equals (-4/46). 
B)  equals (-46). 
C)  equals (-1). 
D)  cannot be calculated without more information. 
A)  equals (-4/46). 
B)  equals (-46). 
C)  equals (-1). 
D)  cannot be calculated without more information.

Question 10

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

Accepted Answer

A)  1. 
B)  0. 
C)  2. 
D)  Not enough information is provided. 
A)  1. 
B)  0. 
C)  2. 
D)  Not enough information is provided.

Question 11

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then the cross price elasticity of the quantity of product A with respect to price of product B is

Accepted Answer

A)  5. 
B)  -5. 
C)  0.2. 
D)  -0.2. 
A)  5. 
B)  -5. 
C)  0.2. 
D)  -0.2.

Question 12

If the price of automobiles were to decrease substantially,the demand curve for automobiles would most likely

Accepted Answer

A)  shift rightward. 
B)  shift leftward. 
C)  remain unchanged. 
D)  become steeper. 
A)  shift rightward. 
B)  shift leftward. 
C)  remain unchanged. 
D)  become steeper.

Question 13

If the supply curve of a product changes so that sellers are now willing to sell two additional units at any given price,the supply curve will

Accepted Answer

A)  shift leftward by two units. 
B)  shift rightward by two units. 
C)  shift vertically up by two units. 
D)  shift vertically down by two units. 
A)  shift leftward by two units. 
B)  shift rightward by two units. 
C)  shift vertically up by two units. 
D)  shift vertically down by two units.

Question 14

Suppose the following information is known about a market:
1.Sellers will not sell at all below a price of $2.
2.At a price of $10,any given seller will sell 10 units.
3.There are 100 identical sellers in the market.
Assuming a linear supply curve,use this information to derive the market supply curve.

Accepted Answer

First,Q = 100q since all firms are ident

Question 15

Show that the slope of the market demand curve is the summation of the slopes of individuals' demand curves.

Accepted Answer

The market demand is given by Q = D¹(p)+

Question 16

The benefit of a subsidy paid on each unit sold will go entirely to the sellers in the market if

Accepted Answer

A)  the supply curve is perfectly inelastic. 
B)  if the subsidy is paid to producers. 
C)  the demand curve is perfectly elastic. 
D)  the supply is perfectly elastic. 
A)  the supply curve is perfectly inelastic. 
B)  if the subsidy is paid to producers. 
C)  the demand curve is perfectly elastic. 
D)  the supply is perfectly elastic.

Question 17

Suppose there is a linear downward-sloping demand curve and a linear upward-sloping supply curve for a good.The price of a substitute good increases and the price of an input to production also increases.Graph the original demand and supply curves,and the curves after the substitute good and input prices increase.How will the equilibrium price change after the substitute and input prices increase?

Accepted Answer

@#IMG-DLM& See the above figure.The new demand cur

Question 18

For the following, please answer "True" or "False" and explain why.
-Government revenue from an excise tax of a given amount is greater when demand is relatively inelastic than when it is relatively elastic.

Accepted Answer

A) True 
 B)False

Question 19

Using the supply and demand curve for wheat above,sketch the supply and demand curves demonstrating the effect of an increase in disposable consumer incomes.How does each curve shift (if at all)to the increase in income? What does the shift do to equilibrium price and quantity?

Accepted Answer

An increase in I will increase

Question 20

Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix,a gallon of gasoline sold in Phoenix,or a gallon of gasoline sold in Arizona? Why?

Accepted Answer

A gallon of gasoline sold at a

The short-run elasticity of supply is less than the long-run elasticity of supply

A horizontal demand curve for a good could arise because consumers

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

In the case of a specific tax the resulting price received by producers depends on

If price is initially above the equilibrium level,

Consider the following products.Which of them has the flattest demand curve?

The National Association of Business Schools recently required that all business schools must hire three additional people with Ph.D.degrees in English literature.What is the immediate effect on the salaries of people with Ph.D.s in English literature? What will be the effect after ten years?

If a government wants to maximize revenues from a tax,it should

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.If the price of wheat is $2,the price elasticity of demand

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then the cross price elasticity of the quantity of product A with respect to price of product B is

If the price of automobiles were to decrease substantially,the demand curve for automobiles would most likely

If the supply curve of a product changes so that sellers are now willing to sell two additional units at any given price,the supply curve will

Show that the slope of the market demand curve is the summation of the slopes of individuals' demand curves.

The benefit of a subsidy paid on each unit sold will go entirely to the sellers in the market if

For the following, please answer "True" or "False" and explain why. -Government revenue from an excise tax of a given amount is greater when demand is relatively inelastic than when it is relatively elastic.

Using the supply and demand curve for wheat above,sketch the supply and demand curves demonstrating the effect of an increase in disposable consumer incomes.How does each curve shift (if at all)to the increase in income? What does the shift do to equilibrium price and quantity?

Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix,a gallon of gasoline sold in Phoenix,or a gallon of gasoline sold in Arizona? Why?

Introduction

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 2: Supply and Demand

The short-run elasticity of supply is less than the long-run elasticity of supply

A horizontal demand curve for a good could arise because consumers

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

In the case of a specific tax the resulting price received by producers depends on

If price is initially above the equilibrium level,

Consider the following products.Which of them has the flattest demand curve?

The National Association of Business Schools recently required that all business schools must hire three additional people with Ph.D.degrees in English literature.What is the immediate effect on the salaries of people with Ph.D.s in English literature? What will be the effect after ten years?

If a government wants to maximize revenues from a tax,it should

The market demand for wheat is Q = 100 - 2p + 1pb,where pb is the price of barley.If the price of wheat is $2,the price elasticity of demand

A given supply curve has a zero intercept.At the current equilibrium price the price elasticity of supply equals

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then the cross price elasticity of the quantity of product A with respect to price of product B is

If the price of automobiles were to decrease substantially,the demand curve for automobiles would most likely

If the supply curve of a product changes so that sellers are now willing to sell two additional units at any given price,the supply curve will

Show that the slope of the market demand curve is the summation of the slopes of individuals' demand curves.

The benefit of a subsidy paid on each unit sold will go entirely to the sellers in the market if

For the following, please answer "True" or "False" and explain why. -Government revenue from an excise tax of a given amount is greater when demand is relatively inelastic than when it is relatively elastic.

Using the supply and demand curve for wheat above,sketch the supply and demand curves demonstrating the effect of an increase in disposable consumer incomes.How does each curve shift (if at all)to the increase in income? What does the shift do to equilibrium price and quantity?

Which good would you expect to have a greater price elasticity: a gallon of gasoline sold at a specific gasoline station on Main Street in Phoenix,a gallon of gasoline sold in Phoenix,or a gallon of gasoline sold in Arizona? Why?

Introduction

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters