Question 1

Suppose the market supply for good X is given by QXS = -100 + 5PX.If the equilibrium price of X is $100 per unit then producers' revenue from X is

Accepted Answer

A) $100. 
B) $20,000. 
C) $40,000. 
D) cannot be determined from the information contained in the question.

Question 2

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

The answer of You are the manager of a car...

Question 3

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P.If a price ceiling of $15 is imposed, what will be the resulting full economic price?

Accepted Answer

A) $19. 
B) $21. 
C) $6. 
D) $25.

Question 4

Under a price ceiling, the full economic price is

Accepted Answer

A) the dollar price paid to the firm. 
B) the opportunity cost of not being able to buy a good when a consumer needs it. 
C) lower than the free-market price. 
D) higher than the free-market price.

Question 5

Suppose the market demand for good X is given by QXd = 20 - 2PX.If the equilibrium price of X is $5 per unit then consumers' expenditure on X is

Accepted Answer

A) $5. 
B) $25. 
C) $50. 
D) cannot be determined from the information contained in the question.

Question 6

If firms expect prices to be higher in the future and the product is not perishable, then

Accepted Answer

A) the current supply curve shifts to the left. 
B) the current supply curve shifts to the right. 
C) producers produce more output to hold back for the future. 
D) none of the statements associated with this question are correct.

Question 7

Advertising provides consumers with information about the underlying existence or quality of a product.These types of advertising messages are called

Accepted Answer

A) persuasive advertising. 
B) informative advertising. 
C) green advertising. 
D) influential advertising.

Question 8

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX.Compute the surplus received by consumers and producers.

Accepted Answer

A) $24 and $24, respectively. 
B) $4 and $4, respectively. 
C) $2 and $6, respectively. 
D) $6 and $2, respectively.

Question 9

When government imposes a price floor above the market price, the result will be that

Accepted Answer

A) surpluses occur. 
B) shortages become a problem. 
C) supply and demand will shift up to the new equilibrium. 
D) a price floor set above the equilibrium price will have no effect on the market equilibrium.

Question 10

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.

Question 11

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P.If a price ceiling of $15 is imposed,

Accepted Answer

A) there will be a surplus of 40 units. 
B) there will be neither a surplus or shortage. 
C) there will be a shortage of 40 units. 
D) there will be a shortage of 20 units.

Question 12

The maximum legal price that can be charged in a market is:

Accepted Answer

A) a price floor. 
B) an ad valorem tax. 
C) the market equilibrium price. 
D) a price ceiling.

Question 13

Given a linear supply function of the form QXS = 3,000 + 3PX - 2Pr - Pw, find the inverse linear supply function assuming Pr = $1,000 and Pw = $100.

Accepted Answer

A) QXS = 900 + 3PX. 
B) PX = 300 + 0.3333QX. 
C) PX = -300 + 0.3333QX. 
D) PX = 2,900 + 3PX.

Question 14

An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline, would shift the supply curve

Accepted Answer

A) down by $1.00. 
B) down by more than $1.00. 
C) up by $1.00. 
D) up by less than $1.00.

Question 15

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P.The equilibrium quantity is:

Accepted Answer

A) 92. 
B) 81. 
C) 45. 
D) 62.

Exam 2: Market Forces: Demand and Supply

Suppose the market supply for good X is given by Q_X^S = -100 + 5P_X.If the equilibrium price of X is $100 per unit then producers' revenue from X 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?

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P.If a price ceiling of $15 is imposed, what will be the resulting full economic price?

Under a price ceiling, the full economic price is

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit then consumers' expenditure on X is

If firms expect prices to be higher in the future and the product is not perishable, then

Advertising provides consumers with information about the underlying existence or quality of a product.These types of advertising messages are called

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 received by consumers and producers.

When government imposes a price floor above the market price, the result will be that

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.

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P.If a price ceiling of $15 is imposed,

The maximum legal price that can be charged in a market is:

Given a linear supply function of the form Q_X^S = 3,000 + 3P_X - 2P_r - P_w, find the inverse linear supply function assuming P_r = $1,000 and P_w = $100.

An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline, would shift the supply curve

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P.The equilibrium quantity is: