Question 1

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 2

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.

Question 3

If supply increases, then the

Accepted Answer

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

Question 4

RB, Inc., is a wholesaler specializing in dry foods, such as rice and dry beans. Its manager is troubled by a recent article in The Wall Street Journal that say a recession in imminent and that income will fall by 3 percent over the next year. What do you think is likely to happen to the price of the products RB, Inc., sells? Why?

Accepted Answer

The answer of RB, Inc., is a wholesaler specializing in...

Question 5

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 6

Good X is a normal good and its demand is given by Qxd = α0 + αXPX + αYPY + αMM + αHH. Then we know that

Accepted Answer

A)  αH > 0. 
B)  αX > 0. 
C)  αY > 0. 
D)  αM > 0.

Question 7

Consider a market characterized by the following inverse demand and supply functions: PX = 50 - 4QX and PX = 10 + 2QX. Compute the surplus producers receive when a $30 per unit price floor is imposed on the market.

Accepted Answer

A)  $75. 
B)  $25. 
C)  $35. 
D)  $50.

Question 8

Suppose the supply curve for a product is given by  and  ,  .
a. How much X is produced?
b. What is the inverse supply curve for X given the above information?
c. Graph this supply curve.
d. Show what happens to this supply curve if the price of Z goes up by $10.

Accepted Answer

The answer of Suppose the supply curve for a product...

Question 9

The demand for good X is given by QX = 4,000 - PX - 2PY + 4PZ + 0.2M, where PY is the price of good Y, PZ is the price of good Z, and M is income. If PY = $800, PZ = $200 and M = $5000, what is the inverse demand function for good X?

Accepted Answer

A)  PX = 1,200 - 2QX. 
B)  PX = 4,200 - QX. 
C)  PX = 3,200 - QX. 
D)  PX = 4,600 - 2QX.

Question 10

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W. If PX = 100, PY = 150, PW = 50, then the supply curve is

Accepted Answer

A)  Qxs = 550. 
B)  Qxs = 150 + Px. 
C)  Qxs = 550 + Px. 
D)  Qxs = 350 + Px.

Exam 2: Market Forces: Demand and Supply

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

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

If supply increases, then the

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.

Good X is a normal good and its demand is given by Q_x^d = α₀ + α_XP_X + α_YP_Y + α_MM + α_HH. Then we know that

Consider a market characterized by the following inverse demand and supply functions: P_X = 50 - 4Q_X and P_X = 10 + 2Q_X. Compute the surplus producers receive when a $30 per unit price floor is imposed on the market.

Suppose the supply curve for a product is given by and , . a. How much X is produced? b. What is the inverse supply curve for X given the above information? c. Graph this supply curve. d. Show what happens to this supply curve if the price of Z goes up by $10.

The demand for good X is given by Q_X = 4,000 - P_X - 2P_Y + 4P_Z + 0.2M, where P_Y is the price of good Y, P_Z is the price of good Z, and M is income. If P_Y = $800, P_Z = $200 and M = $5000, what is the inverse demand function for good X?

The supply function for good X is given by Q_x^s = 1,000 + P_X - 5P_Y - 2P_W, where P_X is the price of X, P_Y is the price of good Y and P_W is the price of input W. If P_X = 100, P_Y = 150, P_W = 50, then the supply curve is