Question 1

Market demand is given as QD = 70 - P.Market supply is given as QS = 3P.If price increases from $30 to $34,what is the price elasticity of demand?

Accepted Answer

A)  0.5 
B)  0.9 
C)  1.1 
D)  2.2 
A)  0.5 
B)  0.9 
C)  1.1 
D)  2.2

Question 2

What does a 10 percent increase in the price of cigarettes lead to?

Accepted Answer

A)  18 percent drop in smoking 
B)  12 percent drop in smoking 
C)  6 percent drop in smoking 
D)  4 percent drop in smoking 
A)  18 percent drop in smoking 
B)  12 percent drop in smoking 
C)  6 percent drop in smoking 
D)  4 percent drop in smoking

Question 3

Market demand is given as Qd = 150 - P.Market supply is given as Qs = 4P.In a perfectly competitive equilibrium,what will be price and quantity traded in the market?

Accepted Answer

A)  price will be $96 and quantity will be 25 
B)  price will be $50 and quantity will be 100 
C)  price will be $30 and quantity will be 120 
D)  price will be $30 and quantity will be 150 
A)  price will be $96 and quantity will be 25 
B)  price will be $50 and quantity will be 100 
C)  price will be $30 and quantity will be 120 
D)  price will be $30 and quantity will be 150

Question 4

Market demand is given as QD = 300 - 6P.Market supply is given as QS = 4P.If price increases from $10 to $14,what is the price elasticity of demand?

Accepted Answer

A)  0.3 
B)  0.7 
C)  1.2 
D)  1.4 
A)  0.3 
B)  0.7 
C)  1.2 
D)  1.4

Question 5

Figure 4-7  
-Refer to the Figure 4-7.What would cause the movement from point B to point A on the graph?

Accepted Answer

A)  an increase in price 
B)  a decrease in price 
C)  a decrease in the price of a substitute good 
D)  an increase in income 
A)  an increase in price 
B)  a decrease in price 
C)  a decrease in the price of a substitute good 
D)  an increase in income

Question 6

Market demand is given as Qd = 80 - P.Market supply is given as Qs = 3P.What would result if the market price were $30?

Accepted Answer

A)  a shortage of 60 
B)  a surplus of 60 
C)  a surplus of 40 
D)  a shortage of 40 
A)  a shortage of 60 
B)  a surplus of 60 
C)  a surplus of 40 
D)  a shortage of 40

Question 7

Which would NOT be a role that prices play in a market economy?

Accepted Answer

A)  Prices guide economic decisions and thereby allocate scarce resources. 
B)  Prices ensure that quantities supplied and demanded are in balance. 
C)  Prices ensure an equal distribution of goods and services. 
D)  Prices influence how much of a good buyers choose to purchase and how much sellers choose to produce. 
A)  Prices guide economic decisions and thereby allocate scarce resources. 
B)  Prices ensure that quantities supplied and demanded are in balance. 
C)  Prices ensure an equal distribution of goods and services. 
D)  Prices influence how much of a good buyers choose to purchase and how much sellers choose to produce.

Question 8

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.If price increases from $30 to $40,what is the price elasticity of demand?

Accepted Answer

A)  0.3 
B)  0.7 
C)  1.5 
D)  2.0 
A)  0.3 
B)  0.7 
C)  1.5 
D)  2.0

Question 9

Morgan tells you that the price of lattes at the coffee shop will be going up next week.How will you probably respond?

Accepted Answer

A)  by decreasing your current demand for lattes 
B)  by increasing your current demand for lattes 
C)  by not changing your current demand for lattes 
D)  by refusing to ever buy any more lattes at that shop 
A)  by decreasing your current demand for lattes 
B)  by increasing your current demand for lattes 
C)  by not changing your current demand for lattes 
D)  by refusing to ever buy any more lattes at that shop

Question 10

Market demand is given as Qd = 300 - 0.5P.Market supply is given as Qs = 50 + 2P.What would result if the market price were $50?

Accepted Answer

A)  a shortage of 100 
B)  a surplus of 100 
C)  a surplus of 125 
D)  a shortage of 125 
A)  a shortage of 100 
B)  a surplus of 100 
C)  a surplus of 125 
D)  a shortage of 125

Question 11

What is an example of substitute goods?

Accepted Answer

A)  butter and margarine 
B)  tennis balls and tennis rackets 
C)  motorhomes and tractors 
D)  peanut butter and jelly 
A)  butter and margarine 
B)  tennis balls and tennis rackets 
C)  motorhomes and tractors 
D)  peanut butter and jelly

Question 12

Suppose the market for standard one-family houses in a Canadian city is described by the equations Qd=(165+IM)-2.5P,and Qs=-60+10P,where Q represents the number of houses demanded or supplied per year (in 10s),P represents the price in 10 000s,and IM is the number of families immigrating into the city during the year,in 10s.
a)What is the equilibrium number of houses and the equilibrium price if there were no immigration (IM=0)? Show this situation in a graph.
Now,suppose 350 families have immigrated within the year (IM=35).
b)Show this new situation on your graph.
c)What are the new equilibrium price and number of houses?
d)How many of the "old" families (non-immigrant)have lost their ability to buy a house?
e)By how much does the number of houses supplied increase?
f)How many of the newcomers buy a house? How could you change the demand equation if you knew that only about 10 percent of the immigrating families buy a house in the year of their arrival?

Accepted Answer

a)The equilibrium price is given by the

Question 13

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous 
A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous

Question 14

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that a decrease in the price of X results in less of good Y sold.What are X and Y called?

Accepted Answer

A)  complementary goods 
B)  normal goods 
C)  inferior goods 
D)  substitute goods 
A)  complementary goods 
B)  normal goods 
C)  inferior goods 
D)  substitute goods

Question 16

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.If price increases from $5 to $7,what is the price elasticity of demand?

Accepted Answer

A)  0.1 
B)  0.3 
C)  1.1 
D)  2.3 
A)  0.1 
B)  0.3 
C)  1.1 
D)  2.3

Question 17

When economists are interested in how markets work,what do they most often work with?

Accepted Answer

A)  the market demand curve 
B)  individuals' demand curves 
C)  individuals' demand schedules 
D)  targeted consumers' demand curves 
A)  the market demand curve 
B)  individuals' demand curves 
C)  individuals' demand schedules 
D)  targeted consumers' demand curves

Question 18

Figure 4-5  
-Refer to the Figure 4-5.Which of the four graphs represents the market for cars after new technology was installed on assembly lines?

Accepted Answer

A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D 
A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D

Question 19

Which of the following cause and effect events are in order for a seller?

Accepted Answer

A)  an input price falls,profit falls,the supply curve shifts left 
B)  an input price falls,profit rises,the supply curve shifts right 
C)  an input price rises,profit falls,the supply curve shifts right 
D)  an input price rises,profit rises,the supply curve shifts left 
A)  an input price falls,profit falls,the supply curve shifts left 
B)  an input price falls,profit rises,the supply curve shifts right 
C)  an input price rises,profit falls,the supply curve shifts right 
D)  an input price rises,profit rises,the supply curve shifts left

Question 20

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell,the price of jelly (a complementary good)fell,more firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous 
B)  quantity will fall and the effect on price is ambiguous 
C)  quantity will rise and the effect on price is ambiguous 
D)  effect on both price and quantity is ambiguous 
A)  price will fall and the effect on quantity is ambiguous 
B)  quantity will fall and the effect on price is ambiguous 
C)  quantity will rise and the effect on price is ambiguous 
D)  effect on both price and quantity is ambiguous

Market demand is given as QD = 70 - P.Market supply is given as QS = 3P.If price increases from $30 to $34,what is the price elasticity of demand?

What does a 10 percent increase in the price of cigarettes lead to?

Market demand is given as Qd = 150 - P.Market supply is given as Qs = 4P.In a perfectly competitive equilibrium,what will be price and quantity traded in the market?

Market demand is given as QD = 300 - 6P.Market supply is given as QS = 4P.If price increases from $10 to $14,what is the price elasticity of demand?

Figure 4-7 -Refer to the Figure 4-7.What would cause the movement from point B to point A on the graph?

Market demand is given as Qd = 80 - P.Market supply is given as Qs = 3P.What would result if the market price were $30?

Which would NOT be a role that prices play in a market economy?

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.If price increases from $30 to $40,what is the price elasticity of demand?

Morgan tells you that the price of lattes at the coffee shop will be going up next week.How will you probably respond?

Market demand is given as Qd = 300 - 0.5P.Market supply is given as Qs = 50 + 2P.What would result if the market price were $50?

What is an example of substitute goods?

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Suppose that a decrease in the price of X results in less of good Y sold.What are X and Y called?

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.If price increases from $5 to $7,what is the price elasticity of demand?

When economists are interested in how markets work,what do they most often work with?

Figure 4-5 -Refer to the Figure 4-5.Which of the four graphs represents the market for cars after new technology was installed on assembly lines?

Which of the following cause and effect events are in order for a seller?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell,the price of jelly (a complementary good)fell,more firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 4: The Market Forces of Supply and Demand

Market demand is given as QD = 70 - P.Market supply is given as QS = 3P.If price increases from $30 to $34,what is the price elasticity of demand?

What does a 10 percent increase in the price of cigarettes lead to?

Market demand is given as Qd = 150 - P.Market supply is given as Qs = 4P.In a perfectly competitive equilibrium,what will be price and quantity traded in the market?

Market demand is given as QD = 300 - 6P.Market supply is given as QS = 4P.If price increases from $10 to $14,what is the price elasticity of demand?

Figure 4-7 -Refer to the Figure 4-7.What would cause the movement from point B to point A on the graph?

Market demand is given as Qd = 80 - P.Market supply is given as Qs = 3P.What would result if the market price were $30?

Which would NOT be a role that prices play in a market economy?

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.If price increases from $30 to $40,what is the price elasticity of demand?

Morgan tells you that the price of lattes at the coffee shop will be going up next week.How will you probably respond?

Market demand is given as Qd = 300 - 0.5P.Market supply is given as Qs = 50 + 2P.What would result if the market price were $50?

What is an example of substitute goods?

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Suppose that a decrease in the price of X results in less of good Y sold.What are X and Y called?

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.If price increases from $5 to $7,what is the price elasticity of demand?

When economists are interested in how markets work,what do they most often work with?

Figure 4-5 -Refer to the Figure 4-5.Which of the four graphs represents the market for cars after new technology was installed on assembly lines?

Which of the following cause and effect events are in order for a seller?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell,the price of jelly (a complementary good)fell,more firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters