Question 1

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

Accepted Answer

A) It will rise. 
B) It will fall. 
C) It may rise or fall. 
D) It will remain the same. 
A) It will rise. 
B) It will fall. 
C) It may rise or fall. 
D) It will remain the same.

Question 2

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W.If the price of input W increases by $10, then the supply of good X

Accepted Answer

A) will increase by 10 units. 
B) will increase by 20 units. 
C) will decrease by 10 units. 
D) none of the statements associated with this question are correct. 
A) will increase by 10 units. 
B) will increase by 20 units. 
C) will decrease by 10 units. 
D) none of the statements associated with this question are correct.

Question 3

Suppose that good X is a substitute for good Y.Then an increase in the price of good Y leads to

Accepted Answer

A) an increase in the demand of good X. 
B) a decrease in the demand of good X. 
C) a decrease in the supply of good X. 
D) an increase in the supply of good X. 
A) an increase in the demand of good X. 
B) a decrease in the demand of good X. 
C) a decrease in the supply of good X. 
D) an increase in the supply of good X.

Question 4

If an excise tax is imposed on a good, then the supply curve

Accepted Answer

A) shifts up by the amount of the demand elasticity. 
B) does not change. 
C) shifts down by the amount of the tax. 
D) shifts up by the amount of the tax. 
A) shifts up by the amount of the demand elasticity. 
B) does not change. 
C) shifts down by the amount of the tax. 
D) shifts up by the amount of the tax.

Question 5

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Accepted Answer

A) holding only input price fixed. 
B) allowing input price to vary. 
C) holding all supply shifters fixed. 
D) allowing all supply shifters to vary. 
A) holding only input price fixed. 
B) allowing input price to vary. 
C) holding all supply shifters fixed. 
D) allowing all supply shifters to vary.

Question 6

Suppose supply decreases and demand increases.What effect will this have on the price?

Accepted Answer

A) it will fall. 
B) it will rise. 
C) it may rise or fall. 
D) it will remain the same. 
A) it will fall. 
B) it will rise. 
C) it may rise or fall. 
D) it will remain the same.

Question 7

Producer surplus is the

Accepted Answer

A) area above the supply curve but below the demand curve. 
B) area above the supply curve but below the market price of the good. 
C) minimum amount required by a producer for producing the good. 
D) maximum amount a producer can collect from consumers. 
A) area above the supply curve but below the demand curve. 
B) area above the supply curve but below the market price of the good. 
C) minimum amount required by a producer for producing the good. 
D) maximum amount a producer can collect from consumers.

Question 8

Which of the following is a linear demand function?

Accepted Answer

A) Qxd = $\alpha$0 + $\alpha$XPX + $\alpha$YPY + $\alpha$MM + $\alpha$HH. 
B) Qxd = $\alpha$PX$\alpha$X PY$\alpha$Y M$\alpha$M H$\alpha$H. 
C) Qxd = $\alpha$0 + $\alpha$XPX2 + $\alpha$YPY2 + $\alpha$MM2 + $\alpha$MH2. 
D) Qxd = $\alpha$ +$\alpha$X log PX +$\alpha$Y log PY + $\alpha$M log M + $\alpha$M log H. 
A) Qxd = $\alpha$0 + $\alpha$XPX + $\alpha$YPY + $\alpha$MM + $\alpha$HH. 
B) Qxd = $\alpha$PX$\alpha$X PY$\alpha$Y M$\alpha$M H$\alpha$H. 
C) Qxd = $\alpha$0 + $\alpha$XPX2 + $\alpha$YPY2 + $\alpha$MM2 + $\alpha$MH2. 
D) Qxd = $\alpha$ +$\alpha$X log PX +$\alpha$Y log PY + $\alpha$M log M + $\alpha$M log H.

Question 9

Good X is a normal good and its demand is given by Qxd = $\alpha$0 + $\alpha$XPX + $\alpha$YPY + $\alpha$MM + $\alpha$HH.Then we know that

Accepted Answer

A) $\alpha$H > 0. 
B) $\alpha$X > 0. 
C) $\alpha$Y > 0. 
D) $\alpha$M > 0. 
A) $\alpha$H > 0. 
B) $\alpha$X > 0. 
C) $\alpha$Y > 0. 
D) $\alpha$M > 0.

Question 10

As additional firms enter an industry, the market supply curve

Accepted Answer

A) shifts to the right. 
B) shifts to the left. 
C) remains the same. 
D) none of the statements associated with this question are correct. 
A) shifts to the right. 
B) shifts to the left. 
C) remains the same. 
D) none of the statements associated with this question are correct.

Question 11

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

Accepted Answer

A) PX = 500 - 2QX - 3PY + 0.01M. 
B) PX = 335 - 0.5QX. 
C) PX = 335 - 2QX. 
D) PX = 500 - 2QX. 
A) PX = 500 - 2QX - 3PY + 0.01M. 
B) PX = 335 - 0.5QX. 
C) PX = 335 - 2QX. 
D) PX = 500 - 2QX.

Question 12

Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X.Based on this information, we know that good X is a

Accepted Answer

A) substitute for good Y and a normal good. 
B) complement for good Y and an inferior good. 
C) complement for good Y and a normal good. 
D) substitute for good Y and an inferior good. 
A) substitute for good Y and a normal good. 
B) complement for good Y and an inferior good. 
C) complement for good Y and a normal good. 
D) substitute for good Y and an inferior good.

Question 13

For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to:

Accepted Answer

A) become flatter. 
B) shift to the left. 
C) shift to the right. 
D) become parallel to the price axis. 
A) become flatter. 
B) shift to the left. 
C) shift to the right. 
D) become parallel to the price axis.

Question 14

Which of the following is not a supply shifter?

Accepted Answer

A) Level of technology. 
B) Prices of inputs. 
C) Average income level. 
D) Weather. 
A) Level of technology. 
B) Prices of inputs. 
C) Average income level. 
D) Weather.

Question 15

If the price of an input rises, producers are willing to produce

Accepted Answer

A) more output at each given price. 
B) less output at each given price. 
C) the same output at each given price. 
D) none of the statements associated with this question are correct. 
A) more output at each given price. 
B) less output at each given price. 
C) the same output at each given price. 
D) none of the statements associated with this question are correct.

Question 16

You are an economic advisor to the Treasurer of the United States.Congress is considering increasing the sales tax on gasoline by $.03 per gallon.Last year motorists purchased 10 million gallons of gas per month.The demand curve is such that every $.01 increase in price decreases sales by 100,000 gallons per month.You also know that for every $.01 increase in price, producers are willing to provide 50,000 more gallons of gasoline to the market.The legislature has stated that the $.03 tax will increase government revenues by $300,000 per month and raise the price of gasoline by $.03 per gallon.Is this correct?

Accepted Answer

Given the information, the supply and de

Question 17

Given a linear supply function of the form QXS = -10 + 5PX, find the inverse linear supply function.

Accepted Answer

A) PX = 2 + 0.2QX. 
B) PX = -10 + 0.2QX. 
C) PX = -10 + 5QX. 
D) PX = 2 + 5QX. 
A) PX = 2 + 0.2QX. 
B) PX = -10 + 0.2QX. 
C) PX = -10 + 5QX. 
D) PX = 2 + 5QX.

Question 18

Demand shifters do not include

Accepted Answer

A) the price of the good. 
B) the consumer's income. 
C) the level of advertising. 
D) the price of the other goods. 
A) the price of the good. 
B) the consumer's income. 
C) the level of advertising. 
D) the price of the other goods.

Question 19

Persuasive advertising influences demand by:

Accepted Answer

A) providing information about the availability of a product. 
B) offering reduced prices for the product. 
C) altering the underlying tastes of consumers. 
D) none of the statements are correct. 
A) providing information about the availability of a product. 
B) offering reduced prices for the product. 
C) altering the underlying tastes of consumers. 
D) none of the statements are correct.

Question 20

Technological advances will cause the supply curve to:

Accepted Answer

A) shift to the left. 
B) shift to the right. 
C) become flatter. 
D) become steeper. 
A) shift to the left. 
B) shift to the right. 
C) become flatter. 
D) become steeper.

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

The supply function for good X is given by Q_x^s = 1,000 + P_X - 5P_Y - 2P_W, where P_X is the price of X, P_Y is the price of good Y and P_W is the price of input W.If the price of input W increases by $10, then the supply of good X

Suppose that good X is a substitute for good Y.Then an increase in the price of good Y leads to

If an excise tax is imposed on a good, then the supply curve

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Suppose supply decreases and demand increases.What effect will this have on the price?

Producer surplus is the

Which of the following is a linear demand function?

Good X is a normal good and its demand is given by Q_x^d = $\alpha$ ₀ + $\alpha$ _XP_X + $\alpha$ _YP_Y + $\alpha$ _MM + $\alpha$ _HH.Then we know that

As additional firms enter an industry, the market supply curve

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Suppose the demand for X is given by Q_x^d = 100 - 2P_X + 4P_Y + 10M + 2A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X.Based on this information, we know that good X is a

For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to:

Which of the following is not a supply shifter?

If the price of an input rises, producers are willing to produce

Given a linear supply function of the form Q_X^S = -10 + 5P_X, find the inverse linear supply function.

Demand shifters do not include

Persuasive advertising influences demand by:

Technological advances will cause the supply curve to:

The Fundamentals of Managerial Economics

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 2: Market Forces: Demand and Supply

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W.If the price of input W increases by $10, then the supply of good X

Suppose that good X is a substitute for good Y.Then an increase in the price of good Y leads to

If an excise tax is imposed on a good, then the supply curve

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Suppose supply decreases and demand increases.What effect will this have on the price?

Producer surplus is the

Which of the following is a linear demand function?

Good X is a normal good and its demand is given by Qxd = α\alphaα 0 + α\alphaα XPX + α\alphaα YPY + α\alphaα MM + α\alphaα HH.Then we know that

As additional firms enter an industry, the market supply curve

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X.Based on this information, we know that good X is a

For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to:

Which of the following is not a supply shifter?

If the price of an input rises, producers are willing to produce

Given a linear supply function of the form QXS = -10 + 5PX, find the inverse linear supply function.

Demand shifters do not include

Persuasive advertising influences demand by:

Technological advances will cause the supply curve to:

The Fundamentals of Managerial Economics

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

The supply function for good X is given by Q_x^s = 1,000 + P_X - 5P_Y - 2P_W, where P_X is the price of X, P_Y is the price of good Y and P_W is the price of input W.If the price of input W increases by $10, then the supply of good X

Good X is a normal good and its demand is given by Q_x^d = $\alpha$ ₀ + $\alpha$ _XP_X + $\alpha$ _YP_Y + $\alpha$ _MM + $\alpha$ _HH.Then we know that

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Suppose the demand for X is given by Q_x^d = 100 - 2P_X + 4P_Y + 10M + 2A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X.Based on this information, we know that good X is a

Given a linear supply function of the form Q_X^S = -10 + 5P_X, find the inverse linear supply function.