Question 1

Other things held constant,the higher the price of a good:

Accepted Answer

A)  the lower the producer surplus. 
B)  the greater the producer surplus. 
C)  the higher the supply. 
D)  the lower the supply.

Question 2

In a competitive market,the market demand is Qd = 70 − 3P and the market supply is Qs = 6P.A price ceiling of $4 will result in a:

Accepted Answer

A)  shortage of 24 units. 
B)  shortage of 34 units. 
C)  surplus of 58 units. 
D)  surplus of 34 units.

Question 3

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.Good X is:

Accepted Answer

A)  an inferior good. 
B)  a normal good. 
C)  a Giffen good. 
D)  a complement.

Question 4

If consumers expect future prices to be higher:

Accepted Answer

A)  they substitute current purchases for future purchases of perishable products. 
B)  stockpiling will happen when products are durable. 
C)  the position of the demand will not change. 
D)  the demand for automobiles today will not change.

Question 5

Good X is a normal good,and its demand is given by Qxd = F1F1F1S1F1F1F100 + F1F1F1S1F1F1F10XPX + F1F1F1S1F1F1F10YPY + F1F1F1S1F1F1F10MM + F1F1F1S1F1F1F10HH.Then we know that:

Accepted Answer

A)  F1F1F1S1F1F1F10H > 0. 
B)  F1F1F1S1F1F1F10X > 0. 
C)  F1F1F1S1F1F1F10Y > 0. 
D)  F1F1F1S1F1F1F10M > 0.

Question 6

In a competitive market,the market demand is Qd = 150 − 2P and the market supply is Qs = 30 + 4P.A price ceiling of $16 will result in a:

Accepted Answer

A)  shortage of 24 units. 
B)  shortage of 34 units. 
C)  surplus of 58 units. 
D)  surplus of 34 units.

Question 7

When quantity demanded exceeds quantity supplied:

Accepted Answer

A)  there exists a surplus of a good. 
B)  the price tends to fall. 
C)  the price is below the equilibrium price. 
D)  there is no excess demand.

Question 8

You are an aide for the Senate Banking Committee chairman.He comes to you with a bill that proposes setting limits on what ATM owners can charge nonaccount holders,over and above what banks charge their own customers.Currently,large banks charge noncustomers an average fee of $1.35 per transaction in addition to the fees the customer's own bank imposes.The senator asks you to look at a proposal that would place a $0.50 cap on the fees ATM owners can charge noncustomers for accessing their money.If this legislation is enacted,what would be the likely effects?

Accepted Answer

The answer of You are an aide for the Senate...

Question 9

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the equilibrium price and quantity in this market.

Accepted Answer

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

Question 10

Consider a market characterized by the following inverse demand and supply functions: PX = 40 − 4QX and PX = 10 + 2QX.Compute the surplus received by consumers and producers.

Accepted Answer

A)  $25 and $25, respectively 
B)  $20 and $40, respectively 
C)  $40 and $20, respectively 
D)  $50 and $25, respectively

Question 11

The law of supply states that,holding all else constant,as the price of a good falls:

Accepted Answer

A)  quantity demanded rises. 
B)  quantity supplied falls. 
C)  quantity supplied rises. 
D)  quantity demanded falls.

Question 12

Suppose both supply and demand increase.What effect will this have on the equilibrium price?

Accepted Answer

A)  It will fall. 
B)  It will rise. 
C)  It may rise or fall. 
D)  It will remain the same.

Question 13

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 X is a:

Accepted Answer

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

Question 14

Suppose there is a simultaneous increase in demand and decrease in supply.What effect will this have on the equilibrium price?

Accepted Answer

A)  It will rise. 
B)  It will fall. 
C)  It may rise or fall. 
D)  It will remain the same.

Question 15

When an effective price ceiling is in place:

Accepted Answer

A)  every consumer is better off. 
B)  every consumer is worse off. 
C)  some consumers are better off and others are worse off. 
D)  on average the net change in consumer surplus is zero.

Question 16

Firms advertise in order to cause the demand for their products to:

Accepted Answer

A)  shift to the right. 
B)  shift to the left. 
C)  remain unchanged. 
D)  All of the statements associated with this question are correct.

Question 17

In a competitive market,the market demand is Qd = 60 − 6P and the market supply is Qs = 4P.A price floor of $9 will result in a:

Accepted Answer

A)  shortage of 30 units. 
B)  shortage of 12 units. 
C)  surplus of 30 units. 
D)  surplus of 12 units.

Question 18

In a competitive market,the market demand is Qd = 60 − 6P and the market supply is Qs = 4P.The full economic price under a price ceiling of $3 is:

Accepted Answer

A)  6. 
B)  7. 
C)  8. 
D)  9.

Question 19

If demand increases,then the:

Accepted Answer

A)  demand curve shifts to the left. 
B)  demand curve shifts to the right. 
C)  equilibrium price goes down. 
D)  equilibrium quantity goes down.

Question 20

All else held constant,as additional firms enter an industry:

Accepted Answer

A)  more output is available at each given price. 
B)  less output is available at each given price. 
C)  the same output is available at each given price. 
D)  output could increase or decrease at each given price.

Exam 2: Market Forces: Demand and Supply

Other things held constant,the higher the price of a good:

In a competitive market,the market demand is Q^d = 70 − 3P and the market supply is Q^s = 6P.A price ceiling of $4 will result in a:

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.Good X is:

If consumers expect future prices to be higher:

Good X is a normal good,and its demand is given by Q_x^d = ₀ + _XP_X + _YP_Y + _MM + _HH.Then we know that:

In a competitive market,the market demand is Q^d = 150 − 2P and the market supply is Q^s = 30 + 4P.A price ceiling of $16 will result in a:

When quantity demanded exceeds quantity supplied:

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 equilibrium price and quantity in this market.

Consider a market characterized by the following inverse demand and supply functions: P_X = 40 − 4Q_X and P_X = 10 + 2Q_X.Compute the surplus received by consumers and producers.

The law of supply states that,holding all else constant,as the price of a good falls:

Suppose both supply and demand increase.What effect will this have on the equilibrium price?

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 X is a:

Suppose there is a simultaneous increase in demand and decrease in supply.What effect will this have on the equilibrium price?

When an effective price ceiling is in place:

Firms advertise in order to cause the demand for their products to:

In a competitive market,the market demand is Q^d = 60 − 6P and the market supply is Q^s = 4P.A price floor of $9 will result in a:

In a competitive market,the market demand is Q^d = 60 − 6P and the market supply is Q^s = 4P.The full economic price under a price ceiling of $3 is:

If demand increases,then the:

All else held constant,as additional firms enter an industry:

Exam 2: Market Forces: Demand and Supply

Other things held constant,the higher the price of a good:

In a competitive market,the market demand is Qd = 70 − 3P and the market supply is Qs = 6P.A price ceiling of $4 will result in a:

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.Good X is:

If consumers expect future prices to be higher:

Good X is a normal good,and its demand is given by Qxd = 0 + XPX + YPY + MM + HH.Then we know that:

In a competitive market,the market demand is Qd = 150 − 2P and the market supply is Qs = 30 + 4P.A price ceiling of $16 will result in a:

When quantity demanded exceeds quantity supplied:

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX. Compute the equilibrium price and quantity in this market.

Consider a market characterized by the following inverse demand and supply functions: PX = 40 − 4QX and PX = 10 + 2QX.Compute the surplus received by consumers and producers.

The law of supply states that,holding all else constant,as the price of a good falls:

Suppose both supply and demand increase.What effect will this have on the equilibrium price?

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 X is a:

Suppose there is a simultaneous increase in demand and decrease in supply.What effect will this have on the equilibrium price?

When an effective price ceiling is in place:

Firms advertise in order to cause the demand for their products to:

In a competitive market,the market demand is Qd = 60 − 6P and the market supply is Qs = 4P.A price floor of $9 will result in a:

In a competitive market,the market demand is Qd = 60 − 6P and the market supply is Qs = 4P.The full economic price under a price ceiling of $3 is:

If demand increases,then the:

All else held constant,as additional firms enter an industry:

In a competitive market,the market demand is Q^d = 70 − 3P and the market supply is Q^s = 6P.A price ceiling of $4 will result in a:

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.Good X is:

Good X is a normal good,and its demand is given by Q_x^d = ₀ + _XP_X + _YP_Y + _MM + _HH.Then we know that:

In a competitive market,the market demand is Q^d = 150 − 2P and the market supply is Q^s = 30 + 4P.A price ceiling of $16 will result in a:

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 equilibrium price and quantity in this market.

Consider a market characterized by the following inverse demand and supply functions: P_X = 40 − 4Q_X and P_X = 10 + 2Q_X.Compute the surplus received by consumers and producers.

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 X is a:

In a competitive market,the market demand is Q^d = 60 − 6P and the market supply is Q^s = 4P.A price floor of $9 will result in a:

In a competitive market,the market demand is Q^d = 60 − 6P and the market supply is Q^s = 4P.The full economic price under a price ceiling of $3 is: