Question 1

If the price elasticity of demand for a good is less than one in absolute terms,we say consumers of this good

Accepted Answer

A)  are not very sensitive to price. 
B)  are not very sensitive to the quantity they demand. 
C)  are very sensitive to price. 
D)  are elastic. 
A)  are not very sensitive to price. 
B)  are not very sensitive to the quantity they demand. 
C)  are very sensitive to price. 
D)  are elastic.

Question 2

Restricting imports tends to

Accepted Answer

A)  shift the demand curve for the product to the left. 
B)  shift the demand curve for the product to the right. 
C)  change the shape of the supply curve. 
D)  increase the quantity supplied of a product. 
A)  shift the demand curve for the product to the left. 
B)  shift the demand curve for the product to the right. 
C)  change the shape of the supply curve. 
D)  increase the quantity supplied of a product.

Question 3

Suppose a market were currently at equilibrium.A rightward shift of the demand curve would cause

Accepted Answer

A)  an increase in price but a decrease in quantity. 
B)  a decrease in price but an increase in quantity. 
C)  an increase in both price and quantity. 
D)  a decrease in both price and quantity. 
A)  an increase in price but a decrease in quantity. 
B)  a decrease in price but an increase in quantity. 
C)  an increase in both price and quantity. 
D)  a decrease in both price and quantity.

Question 4

-The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y,where Qd is the quantity demanded,P is the price,Pb is the price of burritos,Ps is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).If there is a $1,000 increase in personal income,how will the Qd change?

Accepted Answer

A)  increase by 10 
B)  decrease by 10 
C)  unchanged 
D)  not enough information provided 
A)  increase by 10 
B)  decrease by 10 
C)  unchanged 
D)  not enough information provided

Question 5

When two goods are substitutes,a shock that raises the price of one good causes the price of the other good to

Accepted Answer

A)  remain unchanged. 
B)  decrease. 
C)  increase. 
D)  change in an unpredictable manner. 
A)  remain unchanged. 
B)  decrease. 
C)  increase. 
D)  change in an unpredictable manner.

Question 6

In the late 1980s,the health benefits of oat bran were widely advertised.If the price of oats increased 50%,causing the quantity of oats supplied to increase by 40%,then the price elasticity of supply was

Accepted Answer

A)  1.25. 
B)  -1.25. 
C)  -0.80. 
D)  0.80. 
A)  1.25. 
B)  -1.25. 
C)  -0.80. 
D)  0.80.

Question 7

For the following, please answer "True" or "False" and explain why.
-Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax.

Accepted Answer

A) True 
 B)False

Question 8

For a given positively sloped supply curve,the price increase to consumers resulting from a specific tax imposed on sellers will be

Accepted Answer

A)  greater the more price elastic demand is. 
B)  greater the less price elastic demand is. 
C)  equal to the entire tax when demand is perfectly elastic. 
D)  equal to half of the tax whenever demand is unit elastic. 
A)  greater the more price elastic demand is. 
B)  greater the less price elastic demand is. 
C)  equal to the entire tax when demand is perfectly elastic. 
D)  equal to half of the tax whenever demand is unit elastic.

Question 9

-The above figure shows a graph of the market for pizzas in a large town.At a price of $14,there will be

Accepted Answer

A)  no pizzas supplied. 
B)  equilibrium. 
C)  excess supply. 
D)  excess demand. 
A)  no pizzas supplied. 
B)  equilibrium. 
C)  excess supply. 
D)  excess demand.

Question 10

Supply curves

Accepted Answer

A)  slope upward. 
B)  slope downward. 
C)  are horizontal. 
D)  can have many shapes. 
A)  slope upward. 
B)  slope downward. 
C)  are horizontal. 
D)  can have many shapes.

Question 11

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 12

Explain why the price elasticity of demand changes along a linear demand curve.

Accepted Answer

The price elasticity of demand

Question 13

For the following, please answer "True" or "False" and explain why.
-The Law of Supply insures that supply curves slope upward.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the demand for Digital Video Recorders (DVRs)is given by Q = 250 - .25p + 4pc,where Q is the quantity of DVRs demanded (in 1000s),p is the price of a DVR,and pc is the price of cable television.How much does Q change if the price of cable changes slightly (i.e.the partial derivative of demand with respect to pc

Accepted Answer

A)  125 
B)  4.25 
C)  4 
D)  .25 
A)  125 
B)  4.25 
C)  4 
D)  .25

Question 15

Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm,where Qs is the quantity supplied,P is price of ice cream,and Pm is the price of milk ($/gallon).If milk price increases by $2 /gallon due to the policy change,how will the Qs change?

Accepted Answer

A)  decreases by 20 
B)  increases by 20 
C)  decreases by 10 
D)  increases by 10 
A)  decreases by 20 
B)  increases by 20 
C)  decreases by 10 
D)  increases by 10

Question 16

-The above figure shows four different markets with changes in either the supply curve or the demand curve.Which graph best illustrates the market for non-dairy coffee creamer after severe weather destroys a large portion of the coffee crop?

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 17

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

Accepted Answer

Smuggling of non-taxed cigaret

Question 18

In the labor market,if the government imposes a minimum wage that is below the equilibrium wage,then

Accepted Answer

A)  workers who wish to work at the minimum wage will have a difficult time finding jobs. 
B)  firms will hire fewer workers than without the minimum wage law. 
C)  some workers may lose their jobs as a result. 
D)  nothing will happen to the wage rate or employment. 
A)  workers who wish to work at the minimum wage will have a difficult time finding jobs. 
B)  firms will hire fewer workers than without the minimum wage law. 
C)  some workers may lose their jobs as a result. 
D)  nothing will happen to the wage rate or employment.

Question 19

If the demand curve for a good always has unitary price elasticity,what does this imply about consumer behavior?

Accepted Answer

A)  Consumers do not react to a price change. 
B)  Consumers will spend a constant total amount on the good. 
C)  Consumers are irrational. 
D)  Consumers do not obey the Law of Demand. 
A)  Consumers do not react to a price change. 
B)  Consumers will spend a constant total amount on the good. 
C)  Consumers are irrational. 
D)  Consumers do not obey the Law of Demand.

Question 20

The change in price that results from a leftward shift of the supply curve will be greater if

Accepted Answer

A)  the demand curve is relatively steep than if the demand curve is relatively flat. 
B)  the demand curve is relatively flat than if the demand curve is relatively steep. 
C)  the demand curve is horizontal than if the demand curve is vertical. 
D)  the demand curve is horizontal than if the demand curve is downward sloping. 
A)  the demand curve is relatively steep than if the demand curve is relatively flat. 
B)  the demand curve is relatively flat than if the demand curve is relatively steep. 
C)  the demand curve is horizontal than if the demand curve is vertical. 
D)  the demand curve is horizontal than if the demand curve is downward sloping.

If the price elasticity of demand for a good is less than one in absolute terms,we say consumers of this good

Restricting imports tends to

Suppose a market were currently at equilibrium.A rightward shift of the demand curve would cause

When two goods are substitutes,a shock that raises the price of one good causes the price of the other good to

In the late 1980s,the health benefits of oat bran were widely advertised.If the price of oats increased 50%,causing the quantity of oats supplied to increase by 40%,then the price elasticity of supply was

For the following, please answer "True" or "False" and explain why. -Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax.

For a given positively sloped supply curve,the price increase to consumers resulting from a specific tax imposed on sellers will be

-The above figure shows a graph of the market for pizzas in a large town.At a price of $14,there will be

Supply curves

An increase in consumer incomes will lead to

Explain why the price elasticity of demand changes along a linear demand curve.

For the following, please answer "True" or "False" and explain why. -The Law of Supply insures that supply curves slope upward.

Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm,where Qs is the quantity supplied,P is price of ice cream,and Pm is the price of milk ($/gallon).If milk price increases by $2 /gallon due to the policy change,how will the Qs change?

-The above figure shows four different markets with changes in either the supply curve or the demand curve.Which graph best illustrates the market for non-dairy coffee creamer after severe weather destroys a large portion of the coffee crop?

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

In the labor market,if the government imposes a minimum wage that is below the equilibrium wage,then

If the demand curve for a good always has unitary price elasticity,what does this imply about consumer behavior?

The change in price that results from a leftward shift of the supply curve will be greater if

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

If the price elasticity of demand for a good is less than one in absolute terms,we say consumers of this good

Restricting imports tends to

Suppose a market were currently at equilibrium.A rightward shift of the demand curve would cause

When two goods are substitutes,a shock that raises the price of one good causes the price of the other good to

In the late 1980s,the health benefits of oat bran were widely advertised.If the price of oats increased 50%,causing the quantity of oats supplied to increase by 40%,then the price elasticity of supply was

For the following, please answer "True" or "False" and explain why. -Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax.

For a given positively sloped supply curve,the price increase to consumers resulting from a specific tax imposed on sellers will be

-The above figure shows a graph of the market for pizzas in a large town.At a price of $14,there will be

Supply curves

An increase in consumer incomes will lead to

Explain why the price elasticity of demand changes along a linear demand curve.

For the following, please answer "True" or "False" and explain why. -The Law of Supply insures that supply curves slope upward.

Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm,where Qs is the quantity supplied,P is price of ice cream,and Pm is the price of milk ($/gallon).If milk price increases by $2 /gallon due to the policy change,how will the Qs change?

-The above figure shows four different markets with changes in either the supply curve or the demand curve.Which graph best illustrates the market for non-dairy coffee creamer after severe weather destroys a large portion of the coffee crop?

Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state.

In the labor market,if the government imposes a minimum wage that is below the equilibrium wage,then

If the demand curve for a good always has unitary price elasticity,what does this imply about consumer behavior?

The change in price that results from a leftward shift of the supply curve will be greater if

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