Question 1

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 2

Holding all other factors constant,consumers demand more of a good the

Accepted Answer

A)  higher its price. 
B)  lower its price. 
C)  steeper the downward slope of the demand curve. 
D)  steeper the upward slope of the demand curve. 
A)  higher its price. 
B)  lower its price. 
C)  steeper the downward slope of the demand curve. 
D)  steeper the upward slope of the demand curve.

Question 3

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 the quantity demanded for DVRs change if the p rises by $40?

Accepted Answer

A)  drops by 10,000 DVRs 
B)  increases by 16,000 DVRs 
C)  drops by 2,500 DVRs 
D)  increases by 4,000 DVRs 
A)  drops by 10,000 DVRs 
B)  increases by 16,000 DVRs 
C)  drops by 2,500 DVRs 
D)  increases by 4,000 DVRs

Question 4

Once an equilibrium is achieved,it can persist indefinitely because

Accepted Answer

A)  shocks that shift the demand curve or the supply curve cannot occur. 
B)  shocks to the demand curve are always exactly offset by shocks to the supply curve. 
C)  the government never intervenes in markets at equilibrium. 
D)  in the absence of supply/demand shocks no one applies pressure to change the price. 
A)  shocks that shift the demand curve or the supply curve cannot occur. 
B)  shocks to the demand curve are always exactly offset by shocks to the supply curve. 
C)  the government never intervenes in markets at equilibrium. 
D)  in the absence of supply/demand shocks no one applies pressure to change the price.

Question 5

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

Accepted Answer

A)  -3 ∗ (2/50). 
B)  -2 ∗ (50/3). 
C)  -2 ∗ (3/44). 
D)  -3 ∗ (44/2). 
A)  -3 ∗ (2/50). 
B)  -2 ∗ (50/3). 
C)  -2 ∗ (3/44). 
D)  -3 ∗ (44/2).

Question 6

The supply of movie tickets at one theater's box office for this Saturday's 4:30 show of a new movie is

Accepted Answer

A)  perfectly elastic until all seats are filled. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  elastic. 
A)  perfectly elastic until all seats are filled. 
B)  unit elastic. 
C)  perfectly inelastic. 
D)  elastic.

Question 7

Equilibrium is defined as a situation in which

Accepted Answer

A)  neither buyers nor sellers want to change their behavior. 
B)  no government regulations exist. 
C)  demand curves are perfectly horizontal. 
D)  suppliers will supply any amount that buyers wish to buy. 
A)  neither buyers nor sellers want to change their behavior. 
B)  no government regulations exist. 
C)  demand curves are perfectly horizontal. 
D)  suppliers will supply any amount that buyers wish to buy.

Question 8

-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 buritos,Ps is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).We can conclude that burritos and pizzas are

Accepted Answer

A)  substitutes. 
B)  normal goods. 
C)  complements. 
D)  unrelated. 
A)  substitutes. 
B)  normal goods. 
C)  complements. 
D)  unrelated.

Question 9

In the case of a specific tax,tax incidence is independent of who pays

Accepted Answer

A)  only when supply and demand elasticities are not constant. 
B)  only when the tax is collected from consumers. 
C)  in most but not all cases. 
D)  in all cases. 
A)  only when supply and demand elasticities are not constant. 
B)  only when the tax is collected from consumers. 
C)  in most but not all cases. 
D)  in all cases.

Question 10

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 of a change in p must occur for Q to increase by one?

Accepted Answer

A)  fall by 25¢ 
B)  fall by $4 
C)  increase by 25¢ 
D)  fall by $4.25 
A)  fall by 25¢ 
B)  fall by $4 
C)  increase by 25¢ 
D)  fall by $4.25

Question 11

-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 tea 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 12

Electricity accounts for almost 20% of the cost of making steel.A 10% increase in electricity prices results in steel firms decreasing production and thereby demanding 5% less electricity.Over many years,technological innovations can change the way steel firms make steel and reduce the industry's energy requirements.This suggests that the steel industry's short-run elasticity of demand for electricity is probably

Accepted Answer

A)  less than one in absolute terms in the short run. 
B)  less than its long-run elasticity of demand for electricity. 
C)  Both A and B above. 
D)  Neither A nor B above. 
A)  less than one in absolute terms in the short run. 
B)  less than its long-run elasticity of demand for electricity. 
C)  Both A and B above. 
D)  Neither A nor B above.

Question 13

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be demanded unless price is less than

Accepted Answer

A)  $0. 
B)  $5. 
C)  $12. 
D)  $14. 
A)  $0. 
B)  $5. 
C)  $12. 
D)  $14.

Question 14

After tickets for a major sporting event are purchased at the official box office price,a market often develops whereby these tickets sell at prices well above the official box office price.Which of the following scenarios would NOT be able to explain this result?

Accepted Answer

A)  The official price was below equilibrium from the moment the tickets were available. 
B)  Increased publicity causes the demand curve for the event to shift rightward. 
C)  The event was not a sellout. 
D)  Not everyone who wanted a ticket was able to buy one at the box office. 
A)  The official price was below equilibrium from the moment the tickets were available. 
B)  Increased publicity causes the demand curve for the event to shift rightward. 
C)  The event was not a sellout. 
D)  Not everyone who wanted a ticket was able to buy one at the box office.

Question 15

-The above figure shows a graph of the market for pizzas in a large town.At a price of $5,there will be

Accepted Answer

A)  excess demand. 
B)  excess supply. 
C)  equilibrium. 
D)  zero demand. 
A)  excess demand. 
B)  excess supply. 
C)  equilibrium. 
D)  zero demand.

Question 16

As prices change,the elasticity of supply describes the movement

Accepted Answer

A)  of a shift in the supply curve. 
B)  of the equilibrium price. 
C)  along the supply curve. 
D)  from a necessity to a luxury good. 
A)  of a shift in the supply curve. 
B)  of the equilibrium price. 
C)  along the supply curve. 
D)  from a necessity to a luxury good.

Question 17

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then,at a price of $2,the price elasticity of supply is

Accepted Answer

A)  .01. 
B)  .09. 
C)  1. 
D)  11. 
A)  .01. 
B)  .09. 
C)  1. 
D)  11.

Question 18

Explain why when the demand curve for a good is elastic,a one percent reduction in the price of the good will increase a consumer's expenditure on the good.

Accepted Answer

When a good has an elastic demand,a one

Question 19

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then these two products are

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods. 
A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods.

Question 20

Use supply-and-demand graphs to explain why parking is free at the suburban shopping mall but one typically must pay to park when shopping downtown.

Accepted Answer

@#IMG-DLM& See the above figure.At the suburban sh

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

Holding all other factors constant,consumers demand more of a good the

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 the quantity demanded for DVRs change if the p rises by $40?

Once an equilibrium is achieved,it can persist indefinitely because

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

The supply of movie tickets at one theater's box office for this Saturday's 4:30 show of a new movie is

Equilibrium is defined as a situation in which

In the case of a specific tax,tax incidence is independent of who pays

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 of a change in p must occur for Q to increase by one?

-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 tea after severe weather destroys a large portion of the coffee crop?

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be demanded unless price is less than

After tickets for a major sporting event are purchased at the official box office price,a market often develops whereby these tickets sell at prices well above the official box office price.Which of the following scenarios would NOT be able to explain this result?

-The above figure shows a graph of the market for pizzas in a large town.At a price of $5,there will be

As prices change,the elasticity of supply describes the movement

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then,at a price of $2,the price elasticity of supply is

Explain why when the demand curve for a good is elastic,a one percent reduction in the price of the good will increase a consumer's expenditure on the good.

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then these two products are

Use supply-and-demand graphs to explain why parking is free at the suburban shopping mall but one typically must pay to park when shopping downtown.

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

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

Holding all other factors constant,consumers demand more of a good the

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 the quantity demanded for DVRs change if the p rises by $40?

Once an equilibrium is achieved,it can persist indefinitely because

Suppose the inverse demand curve for a good is expressed as Q = 50 - 2p.If the good currently sells for $3,then the price elasticity of demand is

The supply of movie tickets at one theater's box office for this Saturday's 4:30 show of a new movie is

Equilibrium is defined as a situation in which

In the case of a specific tax,tax incidence is independent of who pays

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 of a change in p must occur for Q to increase by one?

-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 tea after severe weather destroys a large portion of the coffee crop?

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be demanded unless price is less than

After tickets for a major sporting event are purchased at the official box office price,a market often develops whereby these tickets sell at prices well above the official box office price.Which of the following scenarios would NOT be able to explain this result?

-The above figure shows a graph of the market for pizzas in a large town.At a price of $5,there will be

As prices change,the elasticity of supply describes the movement

If the supply curve for orange juice is estimated to be Q = 40 + 2p,then,at a price of $2,the price elasticity of supply is

Explain why when the demand curve for a good is elastic,a one percent reduction in the price of the good will increase a consumer's expenditure on the good.

If price of product A increases by 10%,and the quantity demanded for product B drops by 50%,then these two products are

Use supply-and-demand graphs to explain why parking is free at the suburban shopping mall but one typically must pay to park when shopping downtown.

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