Question 1

When it comes to the supply curve of janitors and accountants,

Accepted Answer

A) the supply curve of janitors is more elastic. 
B) the supply curve of accountants is more elastic. 
C) both supply curves are equally elastic. 
D) More information is needed. 
A) the supply curve of janitors is more elastic. 
B) the supply curve of accountants is more elastic. 
C) both supply curves are equally elastic. 
D) More information is needed.

Question 2

-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 3

The demand for labor is given by L(w)= 1000 - .5w,where w is the minimum wage.Find the level of w that maximizes the total wage payment,wL(w).What is the wage-elasticity of labor demand at the maximizing minimum wage?

Accepted Answer

We maximize w(1000 - .5w),whic

Question 4

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 5

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 6

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.The price sellers receive after a specific tax is imposed on sellers

Accepted Answer

A) is less than before the tax. 
B) is higher than before the tax. 
C) is unchanged. 
D) depends on the supply elasticity. 
A) is less than before the tax. 
B) is higher than before the tax. 
C) is unchanged. 
D) depends on the supply elasticity.

Question 7

The supply and demand for wheat is given by QS = 200 + .2A + p and QD = 500 - p,where p is the price of wheat and A is the amount of rainfall (inches per year).The effect of an incremental increase in rainfall on equilibrium will be

Accepted Answer

A) a decrease the price of wheat by 10¢. 
B) a decrease the price of wheat by 20¢. 
C) an increase in the price of wheat by 20¢. 
D) an increase in the price of wheat by 10¢. 
A) a decrease the price of wheat by 10¢. 
B) a decrease the price of wheat by 20¢. 
C) an increase in the price of wheat by 20¢. 
D) an increase in the price of wheat by 10¢.

Question 8

Compute the elasticity of demand for the demand curve p = 15Q-0.7.Does the elasticity vary with the price?

Accepted Answer

For constant elasticity demand

Question 9

A vertical demand curve results in

Accepted Answer

A) no change in quantity when the supply curve shifts. 
B) no change in price when the supply curve shifts. 
C) no change in the supply curve being possible. 
D) no change in quantity when the demand curve shifts. 
A) no change in quantity when the supply curve shifts. 
B) no change in price when the supply curve shifts. 
C) no change in the supply curve being possible. 
D) no change in quantity when the demand curve shifts.

Question 10

Usury laws place a ceiling on interest rates that lenders such as banks can charge borrowers.The interest rate is the price of a loan.Graph a binding usury law on the market for loans,and describe the effects of the law on the quantity of loans supplied and the quantity of loans demanded.

Accepted Answer

@#IMG-DLM& See the above figure.The usur

Question 11

If the demand for oranges is written as Q = 100 - 5p,then the inverse demand function is

Accepted Answer

A) Q = 5p - 100. 
B) Q = 20 - .2p. 
C) p = 20 - 5Q. 
D) p = 20 - .2Q. 
A) Q = 5p - 100. 
B) Q = 20 - .2p. 
C) p = 20 - 5Q. 
D) p = 20 - .2Q.

Question 12

In the case of a linear demand curve,demand becomes more price elastic as price increases.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

If the demand for orange juice is expressed as Q = 2000 - 500p,where Q is measured in gallons and p is measured in dollars,then at the price of $3,the demand curve

Accepted Answer

A) is elastic. 
B) has a unitary elasticity. 
C) is inelastic. 
D) is perfectly inelastic. 
A) is elastic. 
B) has a unitary elasticity. 
C) is inelastic. 
D) is perfectly inelastic.

Question 16

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 17

-The above figure shows a graph of the market for pizzas in a large town.At a price of $7,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 18

Suppose the current price and quantity of widgets is p = $50 and Q = 125.The demand for widgets is log-linear and the price elasticity of demand is E = -2.The supply of widgets is perfectly elastic.
a.Derive the equations for the demand and supply of widgets.
b.What would be the effect on the equilibrium price and quantity if demand were to increase by 500 widgets?

Accepted Answer

a.Because demand is log linear,the deman

Question 19

If the price elasticity of demand for a good is greater than one in absolute terms,we say that demand is

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfect. 
D) vertical. 
A) elastic. 
B) inelastic. 
C) perfect. 
D) vertical.

Question 20

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.

When it comes to the supply curve of janitors and accountants,

-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

The demand for labor is given by L(w)= 1000 - .5w,where w is the minimum wage.Find the level of w that maximizes the total wage payment,wL(w).What is the wage-elasticity of labor demand at the maximizing minimum wage?

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

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.The price sellers receive after a specific tax is imposed on sellers

The supply and demand for wheat is given by Q_S= 200 + .2A + p and Q_D= 500 - p,where p is the price of wheat and A is the amount of rainfall (inches per year).The effect of an incremental increase in rainfall on equilibrium will be

Compute the elasticity of demand for the demand curve p = 15Q^-0.7.Does the elasticity vary with the price?

A vertical demand curve results in

Usury laws place a ceiling on interest rates that lenders such as banks can charge borrowers.The interest rate is the price of a loan.Graph a binding usury law on the market for loans,and describe the effects of the law on the quantity of loans supplied and the quantity of loans demanded.

If the demand for oranges is written as Q = 100 - 5p,then the inverse demand function is

In the case of a linear demand curve,demand becomes more price elastic as price increases.

As prices change,the elasticity of supply describes the movement

If the demand for orange juice is expressed as Q = 2000 - 500p,where Q is measured in gallons and p is measured in dollars,then at the price of $3,the demand curve

Suppose the demand for Digital Video Recorders (DVRs)is given by Q = 250 - .25p + 4p_c,where Q is the quantity of DVRs demanded (in 1000s),p is the price of a DVR,and p_c 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 a graph of the market for pizzas in a large town.At a price of $7,there will be

If the price elasticity of demand for a good is greater than one in absolute terms,we say that demand is

Equilibrium is defined as a situation in which

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

When it comes to the supply curve of janitors and accountants,

-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

The demand for labor is given by L(w)= 1000 - .5w,where w is the minimum wage.Find the level of w that maximizes the total wage payment,wL(w).What is the wage-elasticity of labor demand at the maximizing minimum wage?

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

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.The price sellers receive after a specific tax is imposed on sellers

The supply and demand for wheat is given by QS = 200 + .2A + p and QD = 500 - p,where p is the price of wheat and A is the amount of rainfall (inches per year).The effect of an incremental increase in rainfall on equilibrium will be

Compute the elasticity of demand for the demand curve p = 15Q-0.7.Does the elasticity vary with the price?

A vertical demand curve results in

Usury laws place a ceiling on interest rates that lenders such as banks can charge borrowers.The interest rate is the price of a loan.Graph a binding usury law on the market for loans,and describe the effects of the law on the quantity of loans supplied and the quantity of loans demanded.

If the demand for oranges is written as Q = 100 - 5p,then the inverse demand function is

In the case of a linear demand curve,demand becomes more price elastic as price increases.

As prices change,the elasticity of supply describes the movement

If the demand for orange juice is expressed as Q = 2000 - 500p,where Q is measured in gallons and p is measured in dollars,then at the price of $3,the demand curve

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 a graph of the market for pizzas in a large town.At a price of $7,there will be

If the price elasticity of demand for a good is greater than one in absolute terms,we say that demand is

Equilibrium is defined as a situation in which

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

The supply and demand for wheat is given by Q_S= 200 + .2A + p and Q_D= 500 - p,where p is the price of wheat and A is the amount of rainfall (inches per year).The effect of an incremental increase in rainfall on equilibrium will be

Compute the elasticity of demand for the demand curve p = 15Q^-0.7.Does the elasticity vary with the price?

Suppose the demand for Digital Video Recorders (DVRs)is given by Q = 250 - .25p + 4p_c,where Q is the quantity of DVRs demanded (in 1000s),p is the price of a DVR,and p_c is the price of cable television.How much of a change in p must occur for Q to increase by one?