Question 1

The power of the supply and demand model lies in its ability

Accepted Answer

A)  to generally predict how price and quantity will change with supply and demand shocks. 
B)  to precisely predict the impact of government regulations on quantity and price. 
C)  to precisely determine the difference between price ceilings and price floors. 
D)  to generally predict how profit motive impacts the distribution of goods and services. 
A)  to generally predict how price and quantity will change with supply and demand shocks. 
B)  to precisely predict the impact of government regulations on quantity and price. 
C)  to precisely determine the difference between price ceilings and price floors. 
D)  to generally predict how profit motive impacts the distribution of goods and services.

Question 2

-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 3

A rightward shift of the demand curve will lead to an

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.

Question 4

If a yet-to-be released video game receives a positive review in a popular gaming magazine,

Accepted Answer

A)  the demand curve is expected to shift to the right. 
B)  the demand curve is expected to shift to the left. 
C)  the demand curve is not expected to change. 
D)  for those who read the review, demand shifts to the left. For those who don't read the review, demand shifts to the right. 
A)  the demand curve is expected to shift to the right. 
B)  the demand curve is expected to shift to the left. 
C)  the demand curve is not expected to change. 
D)  for those who read the review, demand shifts to the left. For those who don't read the review, demand shifts to the right.

Question 5

-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 computers after technological advances in making computers occur?

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 6

The military is NOT a perfectly competitive market because

Accepted Answer

A)  there is only one buyer, i.e., the government, for military goods/services. 
B)  there is imperfect information, i.e., intelligence branches. 
C)  there are heterogeneous goods/services because each military branch provides different goods/services. 
D)  All of the above. 
A)  there is only one buyer, i.e., the government, for military goods/services. 
B)  there is imperfect information, i.e., intelligence branches. 
C)  there are heterogeneous goods/services because each military branch provides different goods/services. 
D)  All of the above.

Question 7

The law of demand

Accepted Answer

A)  was passed by the 102nd U.S. Congress. 
B)  is a natural law, much like the law of gravity. 
C)  is considered a "law" in economics because of the overwhelming empirical evidence that supports its logic. 
D)  is considered a "law" in economics in order to force economic models to operate fully. 
A)  was passed by the 102nd U.S. Congress. 
B)  is a natural law, much like the law of gravity. 
C)  is considered a "law" in economics because of the overwhelming empirical evidence that supports its logic. 
D)  is considered a "law" in economics in order to force economic models to operate fully.

Question 8

-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 9

-The above figure shows a graph of the market for pizzas in a large town.As a result of concern over the affordability of pizza,the government restricts sellers from charging a price over $7.As a result,the quantity of pizzas consumed will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  be indeterminable. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  be indeterminable.

Question 10

The demand function for tickets to Ireland is expressed as Qd = 1600 - 0.005P + 2PEngland + 3rain + 2Y,where P is the price for tickets to Ireland,PEngland is the price of tickets to England,rain is the inches of rain Ireland receives annually,and Y is annual household income.Assuming PEngland is $1000,rain is 30 inches per year,and income is 40,000,how much would the price of tickets to Ireland have to fall for consumers to be willing to buy one more trip per year?

Accepted Answer

A)  $15 
B)  $20 
C)  $50 
D)  $200 
A)  $15 
B)  $20 
C)  $50 
D)  $200

Question 11

Consumers and firms are known as price takers only if

Accepted Answer

A)  no market exists to determine the equilibrium price. 
B)  they can set the market price. 
C)  they cannot unilaterally affect the market price. 
D)  excess demand exists. 
A)  no market exists to determine the equilibrium price. 
B)  they can set the market price. 
C)  they cannot unilaterally affect the market price. 
D)  excess demand exists.

Question 12

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 13

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

Accepted Answer

A)  a rightward shift of the supply curve. 
B)  an increase in quantity supplied. 
C)  a leftward shift of the supply curve. 
D)  a downward movement along the supply curve. 
A)  a rightward shift of the supply curve. 
B)  an increase in quantity supplied. 
C)  a leftward shift of the supply curve. 
D)  a downward movement along the supply curve.

Question 14

From the 1970s through the 1990s,the relative price of a college education has increased greatly.During the same time period,college enrollment has also increased.This evidence suggests that during this time period

Accepted Answer

A)  the demand curve for a college education has shifted leftward. 
B)  the demand curve for a college education has shifted rightward. 
C)  the supply curve for a college education has shifted leftward. 
D)  the supply curve for a college education has shifted rightward. 
A)  the demand curve for a college education has shifted leftward. 
B)  the demand curve for a college education has shifted rightward. 
C)  the supply curve for a college education has shifted leftward. 
D)  the supply curve for a college education has shifted rightward.

Question 15

Repealing a tariff will likely

Accepted Answer

A)  increase the quantity produced domestically, increase the quantity purchased domestically, and reduce the price charged domestically. 
B)  reduce the quantity produced domestically, increase the quantity purchased domestically, and reduce the price charged domestically. 
C)  reduce the amount produced abroad, reduce the price domestically, and reduce the quantity purchased domestically. 
D)  increase the amount produced abroad, increase the price domestically, and reduce the quantity purchased domestically. 
A)  increase the quantity produced domestically, increase the quantity purchased domestically, and reduce the price charged domestically. 
B)  reduce the quantity produced domestically, increase the quantity purchased domestically, and reduce the price charged domestically. 
C)  reduce the amount produced abroad, reduce the price domestically, and reduce the quantity purchased domestically. 
D)  increase the amount produced abroad, increase the price domestically, and reduce the quantity purchased domestically.

Question 16

As the price of a good increases,the change in the quantity demanded can be shown by

Accepted Answer

A)  shifting the demand curve leftward. 
B)  shifting the demand curve rightward. 
C)  moving down along the same demand curve. 
D)  moving up along the same demand curve. 
A)  shifting the demand curve leftward. 
B)  shifting the demand curve rightward. 
C)  moving down along the same demand curve. 
D)  moving up along the same demand curve.

Question 17

The supply and demand model assumes

Accepted Answer

A)  no buyer or seller can unilaterally influence the price of the product. 
B)  each unit sold is sold at the same price. 
C)  suppliers and demanders know the price of the product. 
D)  All of the above. 
A)  no buyer or seller can unilaterally influence the price of the product. 
B)  each unit sold is sold at the same price. 
C)  suppliers and demanders know the price of the product. 
D)  All of the above.

Question 18

The supply curve is influenced by

Accepted Answer

A)  the income of consumers. 
B)  the number of customers in the market. 
C)  the prices of the inputs required to produce the product. 
D)  the expectations of future profit. 
A)  the income of consumers. 
B)  the number of customers in the market. 
C)  the prices of the inputs required to produce the product. 
D)  the expectations of future profit.

Question 19

Quotas are most often supported by

Accepted Answer

A)  foreign producers. 
B)  foreign consumers. 
C)  domestic consumers. 
D)  domestic producers. 
A)  foreign producers. 
B)  foreign consumers. 
C)  domestic consumers. 
D)  domestic producers.

Question 20

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

Accepted Answer

At the equilibrium price,selle

The power of the supply and demand model lies in its ability

-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?

A rightward shift of the demand curve will lead to an

If a yet-to-be released video game receives a positive review in a popular gaming magazine,

-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 computers after technological advances in making computers occur?

The military is NOT a perfectly competitive market because

The law of demand

-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?

-The above figure shows a graph of the market for pizzas in a large town.As a result of concern over the affordability of pizza,the government restricts sellers from charging a price over $7.As a result,the quantity of pizzas consumed will

Consumers and firms are known as price takers only if

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

From the 1970s through the 1990s,the relative price of a college education has increased greatly.During the same time period,college enrollment has also increased.This evidence suggests that during this time period

Repealing a tariff will likely

As the price of a good increases,the change in the quantity demanded can be shown by

The supply and demand model assumes

The supply curve is influenced by

Quotas are most often supported by

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

Introduction

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 2: Supply and Demand

The power of the supply and demand model lies in its ability

-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?

A rightward shift of the demand curve will lead to an

If a yet-to-be released video game receives a positive review in a popular gaming magazine,

-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 computers after technological advances in making computers occur?

The military is NOT a perfectly competitive market because

The law of demand

-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?

-The above figure shows a graph of the market for pizzas in a large town.As a result of concern over the affordability of pizza,the government restricts sellers from charging a price over $7.As a result,the quantity of pizzas consumed will

Consumers and firms are known as price takers only if

Suppose the demand curve for a good shifts rightward,causing the equilibrium price to increase.This increase in the price of the good results in

From the 1970s through the 1990s,the relative price of a college education has increased greatly.During the same time period,college enrollment has also increased.This evidence suggests that during this time period

Repealing a tariff will likely

As the price of a good increases,the change in the quantity demanded can be shown by

The supply and demand model assumes

The supply curve is influenced by

Quotas are most often supported by

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

Introduction

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters