Exam 2: Market Forces: Demand and Supply

The supply function for good X is given by Q_x^s = 200 + 4P_X − 3P_Y − 5P_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 P_X = 500,P_Y = 250,and P_W = 30,then the supply curve is:

Which of the following pairs of goods are probably complements?

If a shortage exists in a market,the natural tendency is for:

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

The economic principle that producers are willing to produce more output when price is high is depicted by the:

The demand function recognizes that the quantity of a good consumed depends on:

Which of the following is probably NOT a normal good?

Consider a market characterized by the following inverse demand and supply functions: P_X = 50 − 4Q_X and P_X = 10 + 2Q_X. Compute the surplus producers receive when a $30 per unit price floor is imposed on the market.

The maximum legal price that can be charged in a market is:

Estimates suggest that the North American Free Trade Agreement (NAFTA)will ultimately result in tariff cuts averaging 38 percent globally.Assuming these estimates are correct,would you expect the price of the average imported goods to fall by 38 percent?

The demand function:

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

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?

Suppose market demand and supply are given by Q^d = 100 − 2P and Q^s = 5 + 3P.If the government sets a price floor of $30 and agrees to purchase all surplus at $30 per unit,the total cost to the government will be:

Suppose market demand and supply are given by Q^d = 100 − 2P and Q^s = 5 + 3P.The equilibrium price is:

If steak is a normal good,what do you suppose would happen to price and quantity during an economic recession?

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. An $8 per unit price floor will result in a:

Suppose market demand and supply are given by Q^d = 300 − 4P and Q^s = −50 + 3P.The equilibrium quantity is:

Technological advances will cause the supply curve to:

Jane pays the market price of $69 for a new pair of running shoes,even though she would be happy to pay a maximum of $100 for the same pair of shoes.This is an example of the concept of: