Question 1

For the following, please answer "True" or "False" and explain why.
-For all goods,the long run demand curve is always more elastic than the short run demand curve.

Accepted Answer

A) True 
 B)False

Question 2

Using the supply and demand equations for wheat,solve for the equilibrium price and quantity as functions of I and r.

Accepted Answer

The answer of Using the supply and demand equations for...

Question 3

A competitive equilibrium is described by

Accepted Answer

A)  a price only. 
B)  a quantity only. 
C)  the excess supply minus the excess demand. 
D)  a price and a quantity.

Question 4

A rightward shift of the supply curve will lead to a(n)

Accepted Answer

A)  decrease in equilibrium price. 
B)  excess supply at the old equilibrium price. 
C)  increase in quantity demanded. 
D)  All of the above.

Question 5

Suppose an individual inverse demand curve is given as P = 2 - 1/2 qᶦ,where qᶦ is the quantity demanded by individual i.There are 50 individual consumers with this identical,individual inverse demand curve.Solve for the market demand curve.

Accepted Answer

The answer of Suppose an individual inverse demand curve is...

Question 6

Suppose a market were currently at equilibrium.A rightward shift of the supply curve would cause a(n)

Accepted Answer

A)  increase in price but a decrease in quantity. 
B)  decrease in price but an increase in quantity. 
C)  increase in both price and quantity. 
D)  decrease in both price and quantity.

Question 7

For the following, please answer "True" or "False" and explain why.
-Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

Accepted Answer

A) True 
 B)False

Question 8

Usury laws place a ceiling on interest rates that lenders such as banks can charge borrowers.The interest rate is the price of a loan.Graph a binding usury law on the market for loans,and describe the effects of the law on the quantity of loans supplied and the quantity of loans demanded.

Accepted Answer

The answer of Usury laws place a ceiling on interest...

Question 9

If the price of automobiles were to increase substantially,the demand curve for gasoline would most likely

Accepted Answer

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

Question 10

The change in price that results from a rightward shift in demand will be greater if

Accepted Answer

A)  the supply curve is horizontal than if the supply curve is upward sloping. 
B)  the supply curve is relatively steep than if the supply curve is relatively flat. 
C)  the supply curve is upward sloping than if the supply curve is vertical. 
D)  the supply curve is horizontal than if the supply curve is vertical.

Question 11

From the 1970s through the 1990s,the relative price of a college education has increased greatly.During the same time period,college enrollment has also increased.This evidence suggests that during this time period

Accepted Answer

A)  the demand curve for a college education has shifted leftward. 
B)  the demand curve for a college education has shifted rightward. 
C)  the supply curve for a college education has shifted leftward. 
D)  the supply curve for a college education has shifted rightward.

Question 12

Suppose the market for grass seed can be expressed as:
Demand: Qᴰ = 200 - 5p
Supply: Qˢ = 40 + 5p
If the government collects a $5 specific tax from sellers,how much will the quantity demanded change from the amount demanded before the tax? What price will consumers pay after the tax? What price will sellers receive after the tax? What is the tax revenue?

Accepted Answer

The answer of Suppose the market for grass seed can...

Question 13

The supply curve for tickets for a sporting event

Accepted Answer

A)  is perfectly inelastic. 
B)  is vertical. 
C)  has a price elasticity of zero. 
D)  All of the above.

Question 14

-The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y,where Qd is the quantity demanded,P is the price,Pb is the price of burittos,Ps is the price of soft drinks sold in the pizza restaurants,and Y is personal income per month (in thousand dollars).What is ∆Q/∆Ps?

Accepted Answer

A)  5 
B)  -5 
C)  0.5 
D)  -0.5

Question 15

The demand curve for Widgets is given by QD = 6000 - 2y - 200p + 30pG,where QD is the quantity of widgets demanded,y is the per capital income and pG is the price of Gizmos.An increase in per capital income will cause

Accepted Answer

A)  demand shifts left. 
B)  demand shifts right. 
C)  demand increases. 
D)  movement along the demand curve.

Question 16

Assume the market demand for wheat may be written as
Q = 45 - 2p + 0.3Y + 1pb
where Y refers to income and pb refers to the price of barley.Assuming that wheat and barley both sell for $1,and income is $20,calculate the price elasticity,cross price elasticity and income elasticity for wheat.

Accepted Answer

The answer of Assume the market demand for wheat may...

Question 17

The market supply curve is found by

Accepted Answer

A)  horizontally summing all individual supply curves. 
B)  vertically summing all individual supply curves. 
C)  Either A or B above since they both give the same answer. 
D)  None of the above.

Question 18

Relative to the short-run demand for gasoline,the long-run demand for gasoline is

Accepted Answer

A)  probably more elastic since people need time to change automobiles and driving habits. 
B)  probably less elastic since people need time to change automobiles and driving habits. 
C)  probably more elastic because people can hoard this good. 
D)  probably less elastic because people cannot store this good.

Question 19

As the price of a good increases,the change in the quantity demanded can be shown by

Accepted Answer

A)  shifting the demand curve leftward. 
B)  shifting the demand curve rightward. 
C)  moving down along the same demand curve. 
D)  moving up along the same demand curve.

Question 20

-The above figure shows a graph of the market for pizzas in a large town.If the price price rises from 7 to 8,what is the change in quantity demanded for pizzas?

Accepted Answer

A)  -10 
B)  -30 
C)  -20 
D)  20

Exam 2: Supply and Demand

For the following, please answer "True" or "False" and explain why. -For all goods,the long run demand curve is always more elastic than the short run demand curve.