Question 1

The buyer side of the market is known as the:

Accepted Answer

A)  income side. 
B)  demand side. 
C)  supply side. 
D)  seller side. 
A)  income side. 
B)  demand side. 
C)  supply side. 
D)  seller side.

Question 2

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the surplus producers receive when an $8 per unit price floor is imposed on the market.

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $5 
A)  $1 
B)  $2 
C)  $3 
D)  $5

Question 3

If A and B are complements,an increase in the price of good A would:

Accepted Answer

A) have no effect on the quantity demanded of B. 
B) lead to an increase in demand for B. 
C) lead to a decrease in demand for B. 
D) None of the statements associated with this question are correct. 
A) have no effect on the quantity demanded of B. 
B) lead to an increase in demand for B. 
C) lead to a decrease in demand for B. 
D) None of the statements associated with this question are correct.

Question 4

An ad valorem tax shifts the supply curve:

Accepted Answer

A)  down by the amount of the tax. 
B)  up by the amount of the tax. 
C)  by rotating it counterclockwise. 
D)  by rotating it clockwise. 
A)  down by the amount of the tax. 
B)  up by the amount of the tax. 
C)  by rotating it counterclockwise. 
D)  by rotating it clockwise.

Question 5

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM.If aM is negative,then good y is:

Accepted Answer

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

Question 6

Competitive market equilibrium:

Accepted Answer

A)  is determined by the intersection of the market demand and supply curves. 
B)  implies that quantity supplied is sufficiently larger than quantity demanded. 
C)  is determined by the intersection of the excess demand and excess supply curves. 
D)  implies that quantity demanded is sufficiently larger than quantity supplied. 
A)  is determined by the intersection of the market demand and supply curves. 
B)  implies that quantity supplied is sufficiently larger than quantity demanded. 
C)  is determined by the intersection of the excess demand and excess supply curves. 
D)  implies that quantity demanded is sufficiently larger than quantity supplied.

Question 7

Suppose you are an aide to a U.S.senator who is concerned about the impact of a recently proposed excise tax on the welfare of her constituents.You explained to the senator that one way of measuring the impact on her constituents is to determine how the tax change affects the level of consumer surplus enjoyed by the constituents.Based on your arguments,you are given the go-ahead to conduct a formal analysis,and you obtain the following estimates of demand and supply:
 Qd = 500 - 5P and Qs = 2P −60.
a.Graph the supply and demand curves.
b.What are the equilibrium quantity and equilibrium price?
c.How much consumer surplus exists in this market?
d.If a $2 excise tax is levied on this good,what will happen to the equilibrium price and quantity?
e.What will the consumer surplus be after the tax?

Accepted Answer

a.See the figure below.
 @#IMG-DLM& b.Equilibrium

Question 8

The demand for your product has been estimated to be Qdx = 7,880 - 4Px - 2Py + Pz - 0.1M.The relevant price and income data are as follows:
 Px = 10,Py = 15,Pz = 50,M = 40,000.
a.Which goods are substitutes for X?
 Which are complements?
b.Is X an inferior or a normal good?
c.How much X will be purchased?
d.Graph the demand curve for X given the above information.
e.How will the demand curve change if M falls to 35,000?

Accepted Answer

a.Z is a substitute for X,while Y is a c

Question 9

American Tennishoe,Inc.,is concerned because Congress has proposed an excise tax of $1 on each pair of tennis shoes sold in the United States.The company is lobbying against the tax through an advertising campaign that says the tax will raise the price of tennis shoes by $1.Use supply and demand graphs to show how much of the tax will actually be passed on to consumers.

Accepted Answer

Suppose shoe producers are responsible f

Question 10

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 PX = 100,PY = 150,and PW = 50,then the supply curve is:

Accepted Answer

A)  Qxs = 550. 
B)  Qxs = 150 + Px. 
C)  Qxs = 550 + Px. 
D)  Qxs = 350 + Px. 
A)  Qxs = 550. 
B)  Qxs = 150 + Px. 
C)  Qxs = 550 + Px. 
D)  Qxs = 350 + Px.

Question 11

RB,Inc.,is a wholesaler specializing in dry foods,such as rice and dry beans.Its manager is troubled by a recent article in The Wall Street Journal that says a recession is imminent and that income will fall by 3 percent over the next year.What do you think is likely to happen to the price of the products RB,Inc.,sells?
 Why?

Accepted Answer

a.The cost of producing pens would be re

Question 12

You are the manager of a car dealership that sells luxury automobiles,which are normal goods.Although a recession is expected next year,you expect your clients' incomes to increase over the coming year.What will you do about ordering cars for next year as compared to last year?
 Why?

Accepted Answer

Since the income of your clien

Question 13

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.

Accepted Answer

A)  $0 
B)  $1 
C)  $2 
D)  $3 
A)  $0 
B)  $1 
C)  $2 
D)  $3

Question 14

Apples and oranges are substitutes.A freeze in Florida destroys most of the orange crop.What would you expect to happen to the market for the following:
a.Oranges?
b.Apples?
c.Orange juice?

Accepted Answer

a.The demand for oranges does not change

Question 15

Graphically,a decrease in advertising will cause the demand curve to:

Accepted Answer

A)  become steeper. 
B)  shift rightward. 
C)  become flatter. 
D)  shift leftward. 
A)  become steeper. 
B)  shift rightward. 
C)  become flatter. 
D)  shift leftward.

Question 16

Which of the following statements is INCORRECT?

Accepted Answer

A)  As the population rises, the market demand curve shifts to the right. 
B)  As a greater fraction of the population becomes elderly, the demand for medical services will tend to increase. 
C)  Changes in the composition of the population affect the demand for a product. 
D)  None of the statements associated with this question are incorrect. 
A)  As the population rises, the market demand curve shifts to the right. 
B)  As a greater fraction of the population becomes elderly, the demand for medical services will tend to increase. 
C)  Changes in the composition of the population affect the demand for a product. 
D)  None of the statements associated with this question are incorrect.

Question 17

Other things held constant,the lower the price of a good:

Accepted Answer

A)  the lower the demand. 
B)  the higher the demand. 
C)  the greater the consumer surplus. 
D)  the lower the consumer surplus. 
A)  the lower the demand. 
B)  the higher the demand. 
C)  the greater the consumer surplus. 
D)  the lower the consumer surplus.

Question 18

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the surplus consumers receive when an $8 per unit price floor is imposed on the market.

Accepted Answer

A)  $0 
B)  $1 
C)  $3 
D)  $5 
A)  $0 
B)  $1 
C)  $3 
D)  $5

Question 19

An inferior good is a good:

Accepted Answer

A)  that has low quality. 
B)  that consumers purchase less of when their incomes are higher. 
C)  that consumers purchase more when their incomes are higher. 
D)  of high quality. 
A)  that has low quality. 
B)  that consumers purchase less of when their incomes are higher. 
C)  that consumers purchase more when their incomes are higher. 
D)  of high quality.

Question 20

If the price of an input rises,producers will be 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.

The buyer side of the market is known as the:

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the surplus producers receive when an $8 per unit price floor is imposed on the market.

If A and B are complements,an increase in the price of good A would:

An ad valorem tax shifts the supply curve:

Suppose the demand for good X is given by Q^d_x = 10 + a_xP_x + a_yP_y + a_MM.If a_M is negative,then good y is:

Competitive market equilibrium:

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 P_X = 100,P_Y = 150,and P_W = 50,then the supply curve is:

You are the manager of a car dealership that sells luxury automobiles,which are normal goods.Although a recession is expected next year,you expect your clients' incomes to increase over the coming year.What will you do about ordering cars for next year as compared to last year? Why?

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.

Apples and oranges are substitutes.A freeze in Florida destroys most of the orange crop.What would you expect to happen to the market for the following: a.Oranges? b.Apples? c.Orange juice?

Graphically,a decrease in advertising will cause the demand curve to:

Which of the following statements is INCORRECT?

Other things held constant,the lower the price of a good:

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the surplus consumers receive when an $8 per unit price floor is imposed on the market.

An inferior good is a good:

If the price of an input rises,producers will be willing to produce:

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

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Exam 2: Market Forces: Demand and Supply

The buyer side of the market is known as the:

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the surplus producers receive when an $8 per unit price floor is imposed on the market.

If A and B are complements,an increase in the price of good A would:

An ad valorem tax shifts the supply curve:

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM.If aM is negative,then good y is:

Competitive market equilibrium:

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 PX = 100,PY = 150,and PW = 50,then the supply curve is:

You are the manager of a car dealership that sells luxury automobiles,which are normal goods.Although a recession is expected next year,you expect your clients' incomes to increase over the coming year.What will you do about ordering cars for next year as compared to last year? Why?

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.

Apples and oranges are substitutes.A freeze in Florida destroys most of the orange crop.What would you expect to happen to the market for the following: a.Oranges? b.Apples? c.Orange juice?

Graphically,a decrease in advertising will cause the demand curve to:

Which of the following statements is INCORRECT?

Other things held constant,the lower the price of a good:

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the surplus consumers receive when an $8 per unit price floor is imposed on the market.

An inferior good is a good:

If the price of an input rises,producers will be willing to produce:

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

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the surplus producers receive when an $8 per unit price floor is imposed on the market.

Suppose the demand for good X is given by Q^d_x = 10 + a_xP_x + a_yP_y + a_MM.If a_M is negative,then good y is:

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 P_X = 100,P_Y = 150,and P_W = 50,then the supply curve is:

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X. Compute the surplus consumers receive when an $8 per unit price floor is imposed on the market.