Question 1

The inverse demand function for cigars is defined by p =240- 2q,and the inverse supply function is defined by p = 3 + q.Cigars are taxed at $4 per box.

Accepted Answer

A)  The after-tax price paid by consumers rises by more than $2,and the after-tax price received by suppliers falls by less than $2. 
B)  The after-tax price paid by consumers goes up by less than $2,and the after-tax price received by suppliers rises. 
C)  Consumers and suppliers share the cost of the tax equally. 
D)  The after-tax price paid by consumers rises by $4,and the after-tax price received by suppliers stays constant. 
E)  The after-tax price paid by consumers rises by less than $2,and the after-tax price received by suppliers stays constant. 
A)  The after-tax price paid by consumers rises by more than $2,and the after-tax price received by suppliers falls by less than $2. 
B)  The after-tax price paid by consumers goes up by less than $2,and the after-tax price received by suppliers rises. 
C)  Consumers and suppliers share the cost of the tax equally. 
D)  The after-tax price paid by consumers rises by $4,and the after-tax price received by suppliers stays constant. 
E)  The after-tax price paid by consumers rises by less than $2,and the after-tax price received by suppliers stays constant.

Question 2

Schrecklich and Lamerde are two obscure modernist painters,who are no longer alive but whose paintings are still enjoyed by persons of dubious taste.The demand function for Schrecklichs is 200 - 4PS -2PL and the demand function for Lamerdes is 200-3PL - PS,where PS and PL are respectively the price of Schrecklichs and Lamerdes.If the world supply of Schrecklichs is 110 and the world supply of Lamerdes is 110,then the equilibrium price of Schrecklichs is

Accepted Answer

A)  $9. 
B)  $22.50. 
C)  $36. 
D)  $27. 
E)  $18. 
A)  $9. 
B)  $22.50. 
C)  $36. 
D)  $27. 
E)  $18.

Question 3

Xaquane and Yullare are obscure but talented eighteenth-century painters.The world's stock of Xaquanes is 100 and the world's stock of Yullares is 70.The demand for each painter's work depends on its own price and the price of the other painter's work.If Px is the price of Xaquanes and Py is the price of Yullares,the demand function for Xaquanes is 101 -3Px + 2Py and the demand function for Yullares is 72 + Px - Py.What is the equilibrium price for Yullare's paintings?

Accepted Answer

A)  $5 
B)  $11 
C)  $12 
D)  $7 
E)  None of the above. 
A)  $5 
B)  $11 
C)  $12 
D)  $7 
E)  None of the above.

Question 4

In a certain kingdom,the demand function for rye bread was q = 181 - 8p and the supply function was q = 13 +6p,where p is the price in zlotys and q is loaves of bread.The king made it illegal to sell rye bread for a price above 6 zlotys per loaf.To avoid shortages,he agreed to pay bakers enough of a subsidy for each loaf of bread so as to make supply equal demand.How much would the subsidy per loaf have to be?

Accepted Answer

A)  21 zlotys 
B)  20 zlotys 
C)  14 zlotys 
D)  None of the above. 
A)  21 zlotys 
B)  20 zlotys 
C)  14 zlotys 
D)  None of the above.

Question 5

The demand function for orange juice is q =247 - 8p and the supply function is q =19 + 4p,where q is the number of units sold per year and p is the price per unit,expressed in dollars.The government decides to support the price of orange juice at a price floor of $27 per unit by buying orange juice and destroying all that it has purchased.How many units must the government destroy per year?

Accepted Answer

A)  105 
B)  104 
C)  40 
D)  96 
E)  101 
A)  105 
B)  104 
C)  40 
D)  96 
E)  101

Question 6

The amount of a good supplied is independent of the price.If a sales tax is imposed on the good,then the price paid by consumers will not change at all.

Accepted Answer

A) True 
 B)False

Question 7

The demand function for rental apartments is q = 960 -7p and the supply function is q =160 +3p.The government makes it illegal to charge a rent higher than $35.How much excess demand will there be?

Accepted Answer

A)  149 
B)  450 
C)  364 
D)  726 
E)  245 
A)  149 
B)  450 
C)  364 
D)  726 
E)  245

Question 8

Suppose that King Kanuta,whom you met in your workbook,demands that each of his subjects give him 1 coconut for every coconut that they consume.The king puts all of the coconuts that he collects in a large pile and burns them.The supply of coconuts is given by S(ps)=100ps,where ps is the price received by suppliers.The demand for coconuts by the king's subjects is given by D(pd)= 1,500 - 100pd,where pd is the price paid by consumers.In equilibrium,the price received by suppliers will be

Accepted Answer

A)  $6. 
B)  $9. 
C)  $7.50. 
D)  $15. 
E)  None of the above. 
A)  $6. 
B)  $9. 
C)  $7.50. 
D)  $15. 
E)  None of the above.

Question 9

Daily demand for gasoline at Billy-Bob's Mobile Station is described by Q =776 -200p,where Q are gallons of gasoline sold and p is the price in dollars.Billy-Bob's supply is Q = 2890 + 1,500p.Suppose the state government places a tax of 20 cents on every gallon of gasoline sold.What is the deadweight loss resulting from this tax?

Accepted Answer

A)  3.53 dollars 
B)  3.11 dollars 
C)  0.42 dollars 
D)  96.12 dollars 
E)  34.59 dollars 
A)  3.53 dollars 
B)  3.11 dollars 
C)  0.42 dollars 
D)  96.12 dollars 
E)  34.59 dollars

Question 10

If the supply curve is vertical,then the amount supplied is independent of price.

Accepted Answer

A) True 
 B)False

Question 11

The demand function for fresh strawberries is q = 200 - 5p and the supply function is q =60 + 2p.What is the equilibrium price?

Accepted Answer

A)  $10 
B)  $20 
C)  $40 
D)  $50 
E)  None of the above. 
A)  $10 
B)  $20 
C)  $40 
D)  $50 
E)  None of the above.

Question 12

The inverse demand function for cases of whiskey defined by p = 160 - 6q,and the inverse supply function is defined by p = 61 + 3q.Originally there was no tax on whiskey.Then the government began to tax suppliers of whiskey $27 for every case they sold.How much did the price paid by consumers rise when the new equilibrium was reached?

Accepted Answer

A)  It rose by $27. 
B)  It rose by $29. 
C)  It rose by $18. 
D)  It rose by $16. 
E)  None of the above. 
A)  It rose by $27. 
B)  It rose by $29. 
C)  It rose by $18. 
D)  It rose by $16. 
E)  None of the above.

Question 13

In a crowded city far away,the civic authorities decided that rents were too high.The long-run supply function of two-room rental apartments was given by q=5+2p,and the long-run demand function was given by q =225- 4p,where p is the rental rate in crowns per week.The authorities made it illegal to rent an apartment for more than 30 crowns per week.To avoid a housing shortage,the authorities agreed to pay landlords enough of a subsidy to make supply equal to demand.How much would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?

Accepted Answer

A)  10 crowns 
B)  17 crowns 
C)  20 crowns 
D)  40 crowns 
E)  30 crowns 
A)  10 crowns 
B)  17 crowns 
C)  20 crowns 
D)  40 crowns 
E)  30 crowns

Question 14

Daily demand for gasoline at Billy-Bob's Mobile Station is described by Q = 980 -300p,where Q are gallons of gasoline sold and p is the price in dollars.Billy-Bob's supply is Q=22,980 + 3,000p.Suppose the state government places a tax of 18 cents on every gallon of gasoline sold.What is the deadweight loss resulting from this tax?

Accepted Answer

A)  4.02 dollars 
B)  0.40 dollars 
C)  4.42 dollars 
D)  93.42 dollars 
E)  58.91 dollars 
A)  4.02 dollars 
B)  0.40 dollars 
C)  4.42 dollars 
D)  93.42 dollars 
E)  58.91 dollars

Question 15

In a certain kingdom,the demand function for rye bread was q = 381- 3p and the supply function was q = 5 + 7p,where p is the price in zlotys and q is loaves of bread.The king made it illegal to sell rye bread for a price above 32 zlotys per loaf.To avoid shortages,he agreed to pay bakers enough of a subsidy for each loaf of bread so as to make supply equal demand.How much would the subsidy per loaf have to be?

Accepted Answer

A)  21 zlotys 
B)  14 zlotys 
C)  8 zlotys 
D)  20 zlotys 
E)  None of the above. 
A)  21 zlotys 
B)  14 zlotys 
C)  8 zlotys 
D)  20 zlotys 
E)  None of the above.

Question 16

The demand for pickles is given by p = 167 -3q and the supply is given by p = 5+6q.What is the equilibrium quantity?

Accepted Answer

A)  15 
B)  23 
C)  113 
D)  18 
E)  None of the above. 
A)  15 
B)  23 
C)  113 
D)  18 
E)  None of the above.

Question 17

An economic situation is Pareto optimal only if there is no way to make someone better off.

Accepted Answer

A) True 
 B)False

Question 18

The demand curve for rutabagas is a straight line with slope 26 and the supply curve is a straight line with slope 2.Suppose that a new tax of $3 per sack of rutabagas is introduced.

Accepted Answer

A)  The price received by suppliers falls by more than the price paid by demanders rises. 
B)  The total number of rutabagas purchased increases. 
C)  The price paid by demanders rises by the same amount as the price received by suppliers falls. 
D)  The price paid by demanders rises by more than the price received by suppliers falls. 
E)  The price paid by demanders rises by more than $3. 
A)  The price received by suppliers falls by more than the price paid by demanders rises. 
B)  The total number of rutabagas purchased increases. 
C)  The price paid by demanders rises by the same amount as the price received by suppliers falls. 
D)  The price paid by demanders rises by more than the price received by suppliers falls. 
E)  The price paid by demanders rises by more than $3.

Question 19

The inverse demand function for mangos is defined by the equation p = 91- 5q,where q is the number of crates that are sold.The inverse supply function is defined by p = 3+ 6q.In the past there was no tax on mangos but now a tax of $44 per crate has been imposed.What are the quantities produced before and after the tax was imposed?

Accepted Answer

A)  5 crates before and 5 crates after 
B)  16 crates before and 9 crates after 
C)  14 crates before and 7 crates after 
D)  8 crates before and 4 crates after 
E)  None of the above. 
A)  5 crates before and 5 crates after 
B)  16 crates before and 9 crates after 
C)  14 crates before and 7 crates after 
D)  8 crates before and 4 crates after 
E)  None of the above.

Question 20

The demand for pickles is given by p =131 -2q and the supply is given by p =5 + 7q.What is the equilibrium quantity?

Accepted Answer

A)  11 
B)  14 
C)  19 
D)  103 
E)  None of the above. 
A)  11 
B)  14 
C)  19 
D)  103 
E)  None of the above.

Exam 16:Equilibrium-Part A

The inverse demand function for cigars is defined by p =240- 2q,and the inverse supply function is defined by p = 3 + q.Cigars are taxed at $4 per box.

The amount of a good supplied is independent of the price.If a sales tax is imposed on the good,then the price paid by consumers will not change at all.

The demand function for rental apartments is q = 960 -7p and the supply function is q =160 +3p.The government makes it illegal to charge a rent higher than $35.How much excess demand will there be?

If the supply curve is vertical,then the amount supplied is independent of price.

The demand function for fresh strawberries is q = 200 - 5p and the supply function is q =60 + 2p.What is the equilibrium price?

The demand for pickles is given by p = 167 -3q and the supply is given by p = 5+6q.What is the equilibrium quantity?

An economic situation is Pareto optimal only if there is no way to make someone better off.

The demand curve for rutabagas is a straight line with slope 26 and the supply curve is a straight line with slope 2.Suppose that a new tax of $3 per sack of rutabagas is introduced.

The demand for pickles is given by p =131 -2q and the supply is given by p =5 + 7q.What is the equilibrium quantity?

Demand-Part A

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics-Part A

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Externalities-Part B

Information Technology-Part A

Information Technology-Part B

Public Goods-Part A

Public Goods-Part B

Asymmetric Information-Part A

Asymmetric Information-Part B

Filters