Question 1

Suppose market demand and supply are given by Qd = 100 − 2P and Qs = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

Accepted Answer

A)   0
B)   45
C)   30
D)   55 D

Question 2

A change in income will NOT lead to:

Accepted Answer

A)   a movement along the demand curve.
B)   a leftward shift of the demand curve.
C)   a rightward shift of the demand curve.
D)   All of the statements associated with the question are correct. A

Question 3

Given a linear supply function of the form QXS = −10 + 5PX,find the inverse linear supply function.

Accepted Answer

A)   PX = 2 + 0.2QX
B)   PX = −10 + 0.2QX
C)   PX = −10 + 5QX
D)   PX = 2 + 5QX A

Question 4

Good X is a normal good if an increase in income leads to:

Accepted Answer

A)   an increase in the supply for good X.
B)   an increase in the demand for good X.
C)   a decrease in the demand for good X.
D)   a decrease in the supply for good X.

Question 5

Which of the following is probably NOT a normal good?

Accepted Answer

A)   Designer jeans
B)   Diamond rings
C)   Intercity passenger bus travel
D)   New automobiles

Question 6

You are the manager of Fast & Easy Donuts.Almost all of your donut sales are derived from the drive-through window.You know from experience that coffee is a complement for your donuts.The morning newspaper says that a major storm has just destroyed 50 percent of this year's coffee bean crop.Will this affect how much flour you order?
 Will it affect how many employees you schedule?
 What will happen to prices?

Accepted Answer

The answer of You are the manager of Fast &...

Question 7

If an excise tax is imposed on a good,then the supply curve:

Accepted Answer

A)   shifts up by the amount of the demand elasticity.
B)   does not change.
C)   shifts down by the amount of the tax.
D)   shifts up by the amount of the tax.

Question 8

Consumer surplus is:

Accepted Answer

A)   the value consumers get from a supplier.
B)   the value consumers do not pay because of a discount by a supplier.
C)   the value consumers get from a good but do not pay for.
D)   equal to the amount consumers pay for a good.

Question 9

An excise tax shifts the supply curve:

Accepted Answer

A)   down by the amount of the tax.
B)   up by the amount of the tax.
C)   by rotating it counterclockwise.
D)   by rotating it clockwise.

Question 10

When the 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 11

Suppose X and Y are complements and demand for X is Qxd = F1F1F1S1F1F1F100 + F1F1F1S1F1F1F10XPX + F1F1F1S1F1F1F10YPY + F1F1F1S1F1F1F10MM + F1F1F1S1F1F1F10HH.Then we know:

Accepted Answer

A)   H > 0.
B)   X > 0.
C)   Y 
D)   M < 0.

Question 12

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 13

Demand shifters do NOT include the:

Accepted Answer

A)   price of the good.
B)   consumer's tastes and preferences.
C)   price of the other related goods.
D)   consumer's expectations about future prices of the good.

Question 14

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 15

An ad valorem tax causes the supply curve to:

Accepted Answer

A)   shift to the right.
B)   become flatter.
C)   become steeper.
D)   shift to the left.

Question 16

Given a linear demand function of the form QXd = 100 − 0.5PX,find the inverse linear demand function.

Accepted Answer

A)   PX = 200 − 2QX
B)   PX = 100 − 0.5QX
C)   PX = 100 − 2QX
D)   PX = 100QX − 0.5PX

Question 17

For a steel factory,a decrease in the cost of electricity to the plant will cause the supply curve to:

Accepted Answer

A)   become flatter.
B)   shift to the left.
C)   shift to the right.
D)   become parallel to the price axis.

Question 18

Suppose that supply increases and demand decreases.What effect will this have on price and quantity?

Accepted Answer

A)   Price will increase and quantity may rise or fall.
B)   Price will decrease and quantity will increase.
C)   Price will decrease and quantity will decrease.
D)   None of the statements associated with this question are correct.

Question 19

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM.From the law of demand we know that ax will be:

Accepted Answer

A)   less than zero.
B)   greater than zero.
C)   zero.
D)   None of the statements associated with this question are correct.

Question 20

Suppose the demand for X is given by Qxd = 100 − 2PX + 4PY + 10M + 2A,where PX represents the price of good X,PY is the price of good Y,M is income and A is the amount of advertising on good X.Based on this information,we know that good Y is

Accepted Answer

A)   a substitute for good X.
B)   a complement for good X.
C)   an inferior good.
D)   a normal good.

Exam 2: Market Forces: Demand and Supply

Suppose market demand and supply are given by Q^d = 100 − 2P and Q^s = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

A change in income will NOT lead to:

Given a linear supply function of the form Q_X^S = −10 + 5P_X,find the inverse linear supply function.

Good X is a normal good if an increase in income leads to:

Which of the following is probably NOT a normal good?

If an excise tax is imposed on a good,then the supply curve:

Consumer surplus is:

An excise tax shifts the supply curve:

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

Suppose X and Y are complements and demand for X is Q_x^d = ₀ + _XP_X + _YP_Y + _MM + _HH.Then we know:

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

Demand shifters do NOT include the:

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.

An ad valorem tax causes the supply curve to:

Given a linear demand function of the form Q_X^d = 100 − 0.5P_X,find the inverse linear demand function.

For a steel factory,a decrease in the cost of electricity to the plant will cause the supply curve to:

Suppose that supply increases and demand decreases.What effect will this have on price and quantity?

Suppose the demand for good X is given by Q^d_x = 10 + a_xP_x + a_yP_y + a_MM.From the law of demand we know that a_x will be:

Suppose the demand for X is given by Q_x^d = 100 − 2P_X + 4P_Y + 10M + 2A,where P_X represents the price of good X,P_Y is the price of good Y,M is income and A is the amount of advertising on good X.Based on this information,we know that good Y is

Exam 2: Market Forces: Demand and Supply

Suppose market demand and supply are given by Qd = 100 − 2P and Qs = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

A change in income will NOT lead to:

Given a linear supply function of the form QXS = −10 + 5PX,find the inverse linear supply function.

Good X is a normal good if an increase in income leads to:

Which of the following is probably NOT a normal good?

If an excise tax is imposed on a good,then the supply curve:

Consumer surplus is:

An excise tax shifts the supply curve:

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

Suppose X and Y are complements and demand for X is Qxd = 0 + XPX + YPY + MM + HH.Then we know:

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

Demand shifters do NOT include the:

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.

An ad valorem tax causes the supply curve to:

Given a linear demand function of the form QXd = 100 − 0.5PX,find the inverse linear demand function.

For a steel factory,a decrease in the cost of electricity to the plant will cause the supply curve to:

Suppose that supply increases and demand decreases.What effect will this have on price and quantity?

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM.From the law of demand we know that ax will be:

Suppose the demand for X is given by Qxd = 100 − 2PX + 4PY + 10M + 2A,where PX represents the price of good X,PY is the price of good Y,M is income and A is the amount of advertising on good X.Based on this information,we know that good Y is

Suppose market demand and supply are given by Q^d = 100 − 2P and Q^s = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

Given a linear supply function of the form Q_X^S = −10 + 5P_X,find the inverse linear supply function.

Suppose X and Y are complements and demand for X is Q_x^d = ₀ + _XP_X + _YP_Y + _MM + _HH.Then we know:

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.

Given a linear demand function of the form Q_X^d = 100 − 0.5P_X,find the inverse linear demand function.

Suppose the demand for good X is given by Q^d_x = 10 + a_xP_x + a_yP_y + a_MM.From the law of demand we know that a_x will be:

Suppose the demand for X is given by Q_x^d = 100 − 2P_X + 4P_Y + 10M + 2A,where P_X represents the price of good X,P_Y is the price of good Y,M is income and A is the amount of advertising on good X.Based on this information,we know that good Y is