Exam 2: The Basics of Supply and Demand

Figure 2.7.1 -Refer to Figure 2.7.1 above. If the government wants to set a maximum imposed price on this market, it will set the price at:

A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for b, we can use observed values for Q and P and then set -b(P/Q) equal to the:

Figure 2.4.1 -Refer to Figure 2.4.1. Between two points near D, demand is:

When supply is written as Q = c + dP and P* and Q* are the equilibrium values for price and quantity, which of the following is the value of the price elasticity of supply, E_S?

Figure 2.4.1 -Refer to Figure 2.4.1. Which of the following statements about the demand curve in the figure?

Midcontinent Plastics makes 80 fiberglass truck hoods per day for large truck manufacturers. Each hood sells for $500.00. Midcontinent sells all of its product to the large truck manufacturers. Suppose the own price elasticity of demand for hoods is 0.4 and the price elasticity of supply is 1.5. a. Compute the slope and intercept coefficients for the linear supply and demand equations. b. If the local county government imposed a per unit tax of $25.00 per hood manufactured, what would be the new equilibrium price of hoods to the truck manufacturer? c. Would a per unit tax on hoods change the revenue received by Midcontinent?

The monthly supply of desktop personal computers is given by the equation At a price of $800, what is the price elasticity of supply?

The price elasticity of gasoline supply in the U.S. is 0.4. If the price of gasoline rises by 8%, what is the expected change in the quantity of gasoline supplied in the U.S.?

Suppose a new discovery in computer manufacturing has just made computer production cheaper. Also, the popularity and usefulness of computers continues to grow. Use Supply and Demand analysis to predict how these shocks will affect equilibrium price and quantity of computers. Is there enough information to determine if market prices will rise or fall? Why?

Figure 2.2.2 -Refer to Figure 2.2.2 above. An imposed price of $2.25 can be called:

Which of the following terms refers to price elasticity of demand calculated over a range of prices?

To protect the cod fishery off the northeast coast of the U.S., the federal government may limit the amount of fish that each boat can catch in the fishery. The result of this public policy is to:

Figure 2.2.1 -Refer to Figure 2.2.1 above. If the price of $1.50 is a price imposed by the government, we can call it:

Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a price ceiling that is 10 percent below the market clearing price?

Which of the following will cause the demand curve for Beatles' compact discs to shift to the right?

Plastic and steel are substitutes in the production of body panels for certain automobiles. If the price of plastic increases, with other things remaining the same, we would expect:

A price floor policy establishes a minimum price for a market, and the policy is said to be binding if the market equilibrium price is less than the floor price. What impact does a binding price floor have on the market outcome?

Due to capacity constraints, the price elasticity of supply for most products is:

To protect the cod fishery off the northeast coast of the U.S., the federal government may limit the amount of fish that each boat can catch in the fishery. The result of this public policy is to:

In example 2.3, the textbook shows a surprising trend in the relationship between the price of copper and the consumption of copper over time. From 1880 to 2016, which of the following ocurred?