Question 1

Which of the following would cause the demand for coffee to increase?

Accepted Answer

A) An increase in the price of tea,a substitute for coffee 
B) A decrease in the price of tea,a substitute for coffee 
C) An increase in the price of cream,a complement to coffee 
D) A decrease in the price of coffee 
A) An increase in the price of tea,a substitute for coffee 
B) A decrease in the price of tea,a substitute for coffee 
C) An increase in the price of cream,a complement to coffee 
D) A decrease in the price of coffee

Question 2

When the demand for a commodity decreases and its supply is vertical we can conclude that:

Accepted Answer

A) both price and quantity will rise. 
B) price will fall while quantity remains constant. 
C) quantity will rise while price remains constant. 
D) neither price nor quantity will change. 
A) both price and quantity will rise. 
B) price will fall while quantity remains constant. 
C) quantity will rise while price remains constant. 
D) neither price nor quantity will change.

Question 3

Corn farmers in a country are colluding to reduce the market supply of corn.This will successfully raise the farmers' incomes only if the demand for corn is:

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) infinitely-elastic. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) infinitely-elastic.

Question 4

Farmers can benefit from government intervention if:

Accepted Answer

A) price floors for agricultural goods are set above the equilibrium price. 
B) price floors for fertilizers are set above the equilibrium price. 
C) price ceilings on agricultural products are set below the equilibrium price. 
D) price floors for agricultural goods are set below the equilibrium price. 
A) price floors for agricultural goods are set above the equilibrium price. 
B) price floors for fertilizers are set above the equilibrium price. 
C) price ceilings on agricultural products are set below the equilibrium price. 
D) price floors for agricultural goods are set below the equilibrium price.

Question 5

If a price ceiling is imposed and the quantity demanded exceeds the quantity supplied,which of the following is not likely to occur?

Accepted Answer

A) Nonprice rationing 
B) Black markets 
C) Increased production 
D) Quality deterioration 
A) Nonprice rationing 
B) Black markets 
C) Increased production 
D) Quality deterioration

Question 6

-Refer to Figure 2-1.What is the equilibrium price and quantity in this market?

Accepted Answer

A) P=$2 and Q=35,000 
B) P=$4 and Q=35,000 
C) P=$6 and Q=25,000 
D) P=$2 and Q=45,000 
A) P=$2 and Q=35,000 
B) P=$4 and Q=35,000 
C) P=$6 and Q=25,000 
D) P=$2 and Q=45,000

Question 7

Which of the following is likely to shift the demand for chocolates to the left?

Accepted Answer

A) An increase in the price of cocoa used to make chocolates 
B) Medical reports suggesting increased risk of memory loss among the aged due to high chocolate consumption 
C) A decrease in the price of chocolates 
D) The introduction of minimum wages by the government in an attempt to improve the average wage level in the economy and alleviate poverty 
A) An increase in the price of cocoa used to make chocolates 
B) Medical reports suggesting increased risk of memory loss among the aged due to high chocolate consumption 
C) A decrease in the price of chocolates 
D) The introduction of minimum wages by the government in an attempt to improve the average wage level in the economy and alleviate poverty

Question 8

For each of the following market situations,explain whether the supply curve or the demand curve shits,in which direction does it shift,and the equilibrium price and quantity as a result of the change.
a.The market for Ginkgo Biloba after studies shows its efficacy at memory retention with no adverse side effects.

Accepted Answer

The supply curve shifts out an

Question 9

Which of the following is true of a linear demand curve?

Accepted Answer

A) The demand curve is less elastic at higher prices. 
B) The demand curve is more elastic at lower prices. 
C) Elasticity changes along the demand curve. 
D) Elasticity is constant along the demand curve. 
A) The demand curve is less elastic at higher prices. 
B) The demand curve is more elastic at lower prices. 
C) Elasticity changes along the demand curve. 
D) Elasticity is constant along the demand curve.

Question 10

If the cross-price elasticity of demand between two goods is 1.75,then the two goods are:

Accepted Answer

A) complements. 
B) substitutes. 
C) luxury goods. 
D) inferior goods. 
A) complements. 
B) substitutes. 
C) luxury goods. 
D) inferior goods.

Question 11

"If,at the initial price,there is excess demand,the price will rise.As a consequence,the demand curve shifts down since people buy less at a higher price,and the supply curve shifts up because producers find it profitable to supply more output at a higher price.Price will continue to adjust until there is no excess demand." Which of the following is true about this statement?

Accepted Answer

A) The quotation is correct. 
B) The quotation confuses excess supply with excess demand. 
C) The quotation confuses movements along curves with shifts in curves. 
D) The quotation confuses short-run adjustments with long-run adjustments. 
A) The quotation is correct. 
B) The quotation confuses excess supply with excess demand. 
C) The quotation confuses movements along curves with shifts in curves. 
D) The quotation confuses short-run adjustments with long-run adjustments.

Question 12

Which of the following statements is true of price ceilings?

Accepted Answer

A) The true cost of the good to consumers is usually greater than the money cost. 
B) All consumers benefit from the lower price. 
C) Nonprice rationing associated with price controls is more efficient than rationing by price. 
D) Shortages associated with price ceilings generally do not last any longer than shortages associated with free markets. 
A) The true cost of the good to consumers is usually greater than the money cost. 
B) All consumers benefit from the lower price. 
C) Nonprice rationing associated with price controls is more efficient than rationing by price. 
D) Shortages associated with price ceilings generally do not last any longer than shortages associated with free markets.

Question 13

An excess supply for a product indicates that the price is:

Accepted Answer

A) below the equilibrium price. 
B) above the equilibrium price. 
C) equal to the unit cost of production. 
D) exactly at the choke price. 
A) below the equilibrium price. 
B) above the equilibrium price. 
C) equal to the unit cost of production. 
D) exactly at the choke price.

Question 14

When there is an excess demand for a good,there is:

Accepted Answer

A) downward pressure on price because buyers are willing to pay more. 
B) downward pressure on price because firms accumulate unwanted inventories. 
C) upward pressure on price because buyers are willing to pay more. 
D) upward pressure on price because firms accumulate unwanted inventories. 
A) downward pressure on price because buyers are willing to pay more. 
B) downward pressure on price because firms accumulate unwanted inventories. 
C) upward pressure on price because buyers are willing to pay more. 
D) upward pressure on price because firms accumulate unwanted inventories.

Question 15

The demand curve for soda is represented by the following equation: Q=12-2P.If at the current market price the elasticity of demand for soda is -2,what is the market price?

Accepted Answer

Using the information given,we

Question 16

What will be the shape of the supply curve and the elasticity of supply of a good,if the average cost of production increases with an increase in output? If after a point in time,the per-unit cost of production becomes constant how will the shape of the supply curve and the elasticity change?

Accepted Answer

The supply curve will be upward sloping

Question 17

Along a linear demand curve,the price elasticity:

Accepted Answer

A) is constant. 
B) increases as price falls. 
C) is equal to one at the midpoint. 
D) decreases as the price level rises. 
A) is constant. 
B) increases as price falls. 
C) is equal to one at the midpoint. 
D) decreases as the price level rises.

Question 18

The cross price elasticity of demand for Good X with respect to Good Y is 1.2 and that with respect to Good Z is -0.3.This implies:

Accepted Answer

A) Good X and Good Y are complements. 
B) Good X and Good Z are substitutes. 
C) Good Y and Good Z are substitutes. 
D) Good X and Good Z are complements. 
A) Good X and Good Y are complements. 
B) Good X and Good Z are substitutes. 
C) Good Y and Good Z are substitutes. 
D) Good X and Good Z are complements.

Question 19

A local businessman points out that,as the price of VCR has fallen,sales have increased tremendously.The businessman cites this example as proof that the law of supply does not hold.Which of the following explanations best solves the paradox cited by the businessman?

Accepted Answer

A) Demand was decreasing during the period in question. 
B) Demand was stable during the period in question. 
C) Supply was stable during the period in question. 
D) Supply was increasing during the period in question. 
A) Demand was decreasing during the period in question. 
B) Demand was stable during the period in question. 
C) Supply was stable during the period in question. 
D) Supply was increasing during the period in question.

Question 20

Which of the following is an example of price ceiling?

Accepted Answer

A) A payment made by the government to farmers to prevent them from planting certain crops 
B) Purchase of certain food crops by the government to lower its supply and increase its price 
C) A cap on the automobile insurance rate charged in some states 
D) A minimum wage announced by the government for workers in some specific industries 
A) A payment made by the government to farmers to prevent them from planting certain crops 
B) Purchase of certain food crops by the government to lower its supply and increase its price 
C) A cap on the automobile insurance rate charged in some states 
D) A minimum wage announced by the government for workers in some specific industries

Which of the following would cause the demand for coffee to increase?

When the demand for a commodity decreases and its supply is vertical we can conclude that:

Corn farmers in a country are colluding to reduce the market supply of corn.This will successfully raise the farmers' incomes only if the demand for corn is:

Farmers can benefit from government intervention if:

If a price ceiling is imposed and the quantity demanded exceeds the quantity supplied,which of the following is not likely to occur?

-Refer to Figure 2-1.What is the equilibrium price and quantity in this market?

Which of the following is likely to shift the demand for chocolates to the left?

Which of the following is true of a linear demand curve?

If the cross-price elasticity of demand between two goods is 1.75,then the two goods are:

Which of the following statements is true of price ceilings?

An excess supply for a product indicates that the price is:

When there is an excess demand for a good,there is:

The demand curve for soda is represented by the following equation: Q=12-2P.If at the current market price the elasticity of demand for soda is -2,what is the market price?

What will be the shape of the supply curve and the elasticity of supply of a good,if the average cost of production increases with an increase in output? If after a point in time,the per-unit cost of production becomes constant how will the shape of the supply curve and the elasticity change?

Along a linear demand curve,the price elasticity:

The cross price elasticity of demand for Good X with respect to Good Y is 1.2 and that with respect to Good Z is -0.3.This implies:

A local businessman points out that,as the price of VCR has fallen,sales have increased tremendously.The businessman cites this example as proof that the law of supply does not hold.Which of the following explanations best solves the paradox cited by the businessman?

Which of the following is an example of price ceiling?

An Introduction to Microeconomics

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 2: Supply and Demand

Which of the following would cause the demand for coffee to increase?

When the demand for a commodity decreases and its supply is vertical we can conclude that:

Corn farmers in a country are colluding to reduce the market supply of corn.This will successfully raise the farmers' incomes only if the demand for corn is:

Farmers can benefit from government intervention if:

If a price ceiling is imposed and the quantity demanded exceeds the quantity supplied,which of the following is not likely to occur?

-Refer to Figure 2-1.What is the equilibrium price and quantity in this market?

Which of the following is likely to shift the demand for chocolates to the left?

Which of the following is true of a linear demand curve?

If the cross-price elasticity of demand between two goods is 1.75,then the two goods are:

Which of the following statements is true of price ceilings?

An excess supply for a product indicates that the price is:

When there is an excess demand for a good,there is:

The demand curve for soda is represented by the following equation: Q=12-2P.If at the current market price the elasticity of demand for soda is -2,what is the market price?

What will be the shape of the supply curve and the elasticity of supply of a good,if the average cost of production increases with an increase in output? If after a point in time,the per-unit cost of production becomes constant how will the shape of the supply curve and the elasticity change?

Along a linear demand curve,the price elasticity:

The cross price elasticity of demand for Good X with respect to Good Y is 1.2 and that with respect to Good Z is -0.3.This implies:

A local businessman points out that,as the price of VCR has fallen,sales have increased tremendously.The businessman cites this example as proof that the law of supply does not hold.Which of the following explanations best solves the paradox cited by the businessman?

Which of the following is an example of price ceiling?

An Introduction to Microeconomics

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters