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

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 3

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

Accepted Answer

A) -1.25. 
B) -80.0. 
C) -0.80. 
D) -10.0. 
A) -1.25. 
B) -80.0. 
C) -0.80. 
D) -10.0.

Question 4

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for the air we are currently breathing?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) None of the above 
A) Graph A 
B) Graph B 
C) Graph C 
D) None of the above

Question 5

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for vacations on Mars?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) None of the above 
A) Graph A 
B) Graph B 
C) Graph C 
D) None of the above

Question 6

-The above figure shows a graph of the market for pizzas in a large town.At a price of $10,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 7

If the demand curve is vertical a rightward shift of the supply curve will lead to

Accepted Answer

A) an increase in quantity supplied. 
B) an increase in quantity demanded. 
C) a decrease in quantity demanded. 
D) a decrease in price. 
A) an increase in quantity supplied. 
B) an increase in quantity demanded. 
C) a decrease in quantity demanded. 
D) a decrease in price.

Question 8

The market demand for wheat is Q = 100 - 2p + 1pb + 2Y.If the price of wheat,p,is $2,and the price of barley,pb,is $3,and income,Y,is $1000,the income elasticity of wheat is

Accepted Answer

A) 2 ∗ (1000/2099). 
B) 2. 
C) 1/2 ∗ (1000/2099). 
D) Cannot be calculated from the information provided. 
A) 2 ∗ (1000/2099). 
B) 2. 
C) 1/2 ∗ (1000/2099). 
D) Cannot be calculated from the information provided.

Question 9

The duration of the "short-run"

Accepted Answer

A) is one year. 
B) is the same for all goods. 
C) depends on the relative short-run elasticity of demand and supply for the good. 
D) depends on how long it takes consumers or firms to adjust for a particular good. 
A) is one year. 
B) is the same for all goods. 
C) depends on the relative short-run elasticity of demand and supply for the good. 
D) depends on how long it takes consumers or firms to adjust for a particular good.

Question 10

Suppose there is a linear downward-sloping demand curve and a linear upward-sloping supply curve for a good.The price of a substitute good increases and the price of an input to production also increases.Graph the original demand and supply curves,and the curves after the substitute good and input prices increase.How will the equilibrium price change after the substitute and input prices increase?

Accepted Answer

@#IMG-DLM& See the above figure.The new demand cur

Question 11

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 12

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 13

Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

At the equilibrium price,selle

Question 15

-The above figure shows the market for crude oil.If the oil exploration firms convince the government to set a minimum price of $4 per barrel,then

Accepted Answer

A) 100 barrels of crude oil will be sold at $4. 
B) zero barrels of crude oil will be sold. 
C) zero barrels of crude oil will be demanded. 
D) None of the above. 
A) 100 barrels of crude oil will be sold at $4. 
B) zero barrels of crude oil will be sold. 
C) zero barrels of crude oil will be demanded. 
D) None of the above.

Question 16

Explain why the supply-and-demand model should not be used to analyze the market for jeans.

Accepted Answer

Products in the jeans market are not ide

Question 17

If a government wants to maximize revenues from a tax,it should

Accepted Answer

A) impose it on sellers. 
B) impose it on consumers. 
C) choose a good with a relatively elastic demand. 
D) choose a good with a relatively inelastic demand. 
A) impose it on sellers. 
B) impose it on consumers. 
C) choose a good with a relatively elastic demand. 
D) choose a good with a relatively inelastic demand.

Question 18

Suppose the market for corn is given by the following equations for supply and demand:
QS = 2p − 2
QD = 13 − p
where Q is the quantity in millions of bushels per year and p is the price.
a.Calculate the equilibrium price and quantity.Sketch the supply and demand curves on a graph indicating the equilibrium.
b.If a price floor is imposed at $7 per bushel,will there be a surplus or a shortage? What is the quantity of excess supply or demand that results? Draw a graph to show this.

Accepted Answer

a.2p - 2 = 13 - p p* = 5 Q* =

Question 19

The market demand for wheat is Q = 100 - 2p + 1  
,where  
Is the price of barley.The cross price elasticity of demand for wheat with respect to barley

Accepted Answer

A) cannot be calculated from just the information provided. 
B) is negative. 
C) suggests that wheat and barley are complements. 
D) equals 1. 
A) cannot be calculated from just the information provided. 
B) is negative. 
C) suggests that wheat and barley are complements. 
D) equals 1.

Question 20

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.

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

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

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for the air we are currently breathing?

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for vacations on Mars?

-The above figure shows a graph of the market for pizzas in a large town.At a price of $10,there will be

If the demand curve is vertical a rightward shift of the supply curve will lead to

The market demand for wheat is Q = 100 - 2p + 1p_b + 2Y.If the price of wheat,p,is $2,and the price of barley,p_b,is $3,and income,Y,is $1000,the income elasticity of wheat is

The duration of the "short-run"

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

Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

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

-The above figure shows the market for crude oil.If the oil exploration firms convince the government to set a minimum price of $4 per barrel,then

Explain why the supply-and-demand model should not be used to analyze the market for jeans.

If a government wants to maximize revenues from a tax,it should

The market demand for wheat is Q = 100 - 2p + 1 ,where Is the price of barley.The cross price elasticity of demand for wheat with respect to barley

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?

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?

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

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for the air we are currently breathing?

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for vacations on Mars?

-The above figure shows a graph of the market for pizzas in a large town.At a price of $10,there will be

If the demand curve is vertical a rightward shift of the supply curve will lead to

The market demand for wheat is Q = 100 - 2p + 1pb + 2Y.If the price of wheat,p,is $2,and the price of barley,pb,is $3,and income,Y,is $1000,the income elasticity of wheat is

The duration of the "short-run"

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

Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

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

-The above figure shows the market for crude oil.If the oil exploration firms convince the government to set a minimum price of $4 per barrel,then

Explain why the supply-and-demand model should not be used to analyze the market for jeans.

If a government wants to maximize revenues from a tax,it should

The market demand for wheat is Q = 100 - 2p + 1 ,where Is the price of barley.The cross price elasticity of demand for wheat with respect to barley

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?

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 market demand for wheat is Q = 100 - 2p + 1p_b + 2Y.If the price of wheat,p,is $2,and the price of barley,p_b,is $3,and income,Y,is $1000,the income elasticity of wheat is