Question 1

In the long run, new firms can enter an industry and so the supply elasticity tends to be:

Accepted Answer

A)  more elastic than in the short run. 
B)  less elastic than in the short run. 
C)  perfectly elastic. 
D)  perfectly inelastic. 
A)  more elastic than in the short run. 
B)  less elastic than in the short run. 
C)  perfectly elastic. 
D)  perfectly inelastic.

Question 2

The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that:

Accepted Answer

A)  good A is used to produce good B. 
B)  good B is used to produce good A. 
C)  goods A and B are substitutes. 
D)  goods A and B are complements. 
E)  none of the above 
A)  good A is used to produce good B. 
B)  good B is used to produce good A. 
C)  goods A and B are substitutes. 
D)  goods A and B are complements. 
E)  none of the above

Question 3

Figure 2.5.6
-Refer to Figure 2.5.6. Which of the following best represents the market for coffee in the intermediate run?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  None of the above. 
A)  A 
B)  B 
C)  C 
D)  None of the above.

Question 4

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 c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to:

Accepted Answer

A)  c(I/Q). 
B)  c(Q/I). 
C)  -b(I/Q). 
D)  Q/(cI). 
A)  c(I/Q). 
B)  c(Q/I). 
C)  -b(I/Q). 
D)  Q/(cI).

Question 5

Coffee and cream:

Accepted Answer

A)  are both luxury goods. 
B)  are complements. 
C)  are both more inelastic in demand in the long run than in the short run. 
D)  have a positive cross price elasticity of demand. 
A)  are both luxury goods. 
B)  are complements. 
C)  are both more inelastic in demand in the long run than in the short run. 
D)  have a positive cross price elasticity of demand.

Question 6

Figure 2.3.3
-Refer to Figure 2.3.3 above. Which of the two panels best describes the trend in college costs from 1970 to 2016?

Accepted Answer

A)  Panel (a) 
B)  Panel (b) 
C)  Both panels 
D)  Neither panel 
A)  Panel (a) 
B)  Panel (b) 
C)  Both panels 
D)  Neither panel

Question 7

We observe that both the price of and quantity sold of golf balls are rising over time. This is due to:

Accepted Answer

A)  continual improvements in the technology used to produce golf balls. 
B)  increases in the price of golf clubs over time. 
C)  decreases in membership fees for country clubs with golf facilities. 
D)  more stringent professional requirements on the quality of golf balls requiring producers to use more expensive raw materials. 
A)  continual improvements in the technology used to produce golf balls. 
B)  increases in the price of golf clubs over time. 
C)  decreases in membership fees for country clubs with golf facilities. 
D)  more stringent professional requirements on the quality of golf balls requiring producers to use more expensive raw materials.

Question 8

You are analyzing the demand for good X. Which of the following will result in a shift to the right of the demand curve for X?

Accepted Answer

A)  A decrease in the price of X 
B)  An increase in the price of a good that is a complement to good X 
C)  An increase in the price of a good that is a substitute for X 
D)  all of the above 
A)  A decrease in the price of X 
B)  An increase in the price of a good that is a complement to good X 
C)  An increase in the price of a good that is a substitute for X 
D)  all of the above

Question 9

According to the textbook, the income elasticity of demand is:

Accepted Answer

A)  much smaller in the short run than in the long run. 
B)  much larger in the short run than in the long run. 
C)  about the same in the short run and in the long run. 
D)  is difficult to differentiate from the short run to the long run. 
A)  much smaller in the short run than in the long run. 
B)  much larger in the short run than in the long run. 
C)  about the same in the short run and in the long run. 
D)  is difficult to differentiate from the short run to the long run.

Question 10

The current market price for good X is below the equilibrium price, and then the demand curve for X shifts rightward. What is the likely outcome of the demand shift?

Accepted Answer

A)  The surplus increases. 
B)  The surplus decreases. 
C)  The shortage increases. 
D)  The shortage decreases. 
A)  The surplus increases. 
B)  The surplus decreases. 
C)  The shortage increases. 
D)  The shortage decreases.

Question 11

Example 2.2 in the textbook explains the source of wage inequality in the United States. In terms of supply and demand, the wage of skilled workers has:

Accepted Answer

A)  decreased, because the supply has increased more than the increase in demand for those workers. 
B)  decreased, because the demand has decreased and the supply has increased. 
C)  increased, because the demand has increased faster than the increase in supply. 
D)  increased, because the demand has increased, while the supply has decreased. 
A)  decreased, because the supply has increased more than the increase in demand for those workers. 
B)  decreased, because the demand has decreased and the supply has increased. 
C)  increased, because the demand has increased faster than the increase in supply. 
D)  increased, because the demand has increased, while the supply has decreased.

Question 12

The income elasticity of demand refers to:

Accepted Answer

A)  a change in income following a change in quantity demanded. 
B)  the substitution of one good for another as income changes. 
C)  the percentage change in quantity demanded resulting from a 1-percent increase in income. 
D)  the change in income required for quantity demanded to change by 1%. 
A)  a change in income following a change in quantity demanded. 
B)  the substitution of one good for another as income changes. 
C)  the percentage change in quantity demanded resulting from a 1-percent increase in income. 
D)  the change in income required for quantity demanded to change by 1%.

Question 13

Figure 2.4.1
-Refer to Figure 2.4.1. Between points B and C, demand is:

Accepted Answer

A)  small. 
B)  inelastic, but not completely inelastic. 
C)  unit elastic. 
D)  elastic, but not infinitely elastic. 
E)  infinitely elastic. 
A)  small. 
B)  inelastic, but not completely inelastic. 
C)  unit elastic. 
D)  elastic, but not infinitely elastic. 
E)  infinitely elastic.

Question 14

The market for gravel has been estimated to have these supply and demand relationships:
Supply P = 10 + 0.01Q
Demand P = 100 - 0.01Q,
where P represents price per unit in dollars, and Q represents sales per week in tons. Determine the equilibrium price and sales. Determine the amount of shortage or surplus that would develop at

Accepted Answer

The equilibrium price can be found by eq

Question 15

Which of the following will cause the price of beer to rise?

Accepted Answer

A)  A shift to the right in the demand curve for beer 
B)  A shift to the left in the supply curve of beer 
C)  both A and B 
D)  none of the above 
A)  A shift to the right in the demand curve for beer 
B)  A shift to the left in the supply curve of beer 
C)  both A and B 
D)  none of the above

Question 16

Scenario 2.1:
The demand for books is: QS1U1B1dS1U1B0 = 120 - P
The supply of books is: QS1U1B1sS1U1B0 = 5P
-Refer to Scenario 2.1. If P = $25, which of the following is true?

Accepted Answer

A)  There is a surplus equal to 30. 
B)  There is a shortage equal to 30. 
C)  There is a shortage, but it is impossible to determine how large. 
D)  There is a surplus, but it is impossible to determine how large. 
A)  There is a surplus equal to 30. 
B)  There is a shortage equal to 30. 
C)  There is a shortage, but it is impossible to determine how large. 
D)  There is a surplus, but it is impossible to determine how large.

Question 17

Suppose that the resale of tickets to professional football games is illegal in Missouri. Due to the high demand for Chiefs (who play in Kansas City, Missouri) tickets there is a shortage of tickets at the current ticket price. Given that the Chiefs will not raise the price at which they sell the tickets, what would be the result of allowing tickets to be resold in a secondary market at whatever price the market would support? If speculators entered the market and began buying tickets directly from the Chiefs in hopes of reselling the tickets later, what would happen to the line outside of the ticket offices when the tickets are initially sold?

Accepted Answer

Initially, there is a shortage due to th

Question 18

Scenario 2.1:
The demand for books is: QS1U1B1dS1U1B0 = 120 - P
The supply of books is: QS1U1B1sS1U1B0 = 5P
-Refer to Scenario 2.1. If P = $15, which of the following is true?

Accepted Answer

A)  Quantity supplied is greater than quantity demanded. 
B)  Quantity supplied is less than quantity demanded. 
C)  Quantity supplied equals quantity demanded. 
D)  There is a surplus. 
A)  Quantity supplied is greater than quantity demanded. 
B)  Quantity supplied is less than quantity demanded. 
C)  Quantity supplied equals quantity demanded. 
D)  There is a surplus.

Question 19

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:

Accepted Answer

A)  supply curve for electric and hybrid autos will shift rightward. 
B)  supply curve for electric and hybrid autos will shift leftward. 
C)  demand curve for electric and hybrid autos will shift rightward. 
D)  demand curve for electric and hybrid autos will shift leftward. 
A)  supply curve for electric and hybrid autos will shift rightward. 
B)  supply curve for electric and hybrid autos will shift leftward. 
C)  demand curve for electric and hybrid autos will shift rightward. 
D)  demand curve for electric and hybrid autos will shift leftward.

Question 20

Suppose the observed annual quantity of steel exchanged in the European market is 30 million metric tons, and the observed market price is 90 euros per ton. If the price elasticity of demand for steel is -0.3 in Europe, what is an appropriate value for the price coefficient (b) in a linear demand function   ?

Accepted Answer

A)  b = 0.9 
B)  b = -0.9 
C)  b = 0.1 
D)  b = -0.1 
A)  b = 0.9 
B)  b = -0.9 
C)  b = 0.1 
D)  b = -0.1

In the long run, new firms can enter an industry and so the supply elasticity tends to be:

The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that:

Figure 2.5.6 -Refer to Figure 2.5.6. Which of the following best represents the market for coffee in the intermediate run?

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 c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to:

Coffee and cream:

Figure 2.3.3 -Refer to Figure 2.3.3 above. Which of the two panels best describes the trend in college costs from 1970 to 2016?

We observe that both the price of and quantity sold of golf balls are rising over time. This is due to:

You are analyzing the demand for good X. Which of the following will result in a shift to the right of the demand curve for X?

According to the textbook, the income elasticity of demand is:

The current market price for good X is below the equilibrium price, and then the demand curve for X shifts rightward. What is the likely outcome of the demand shift?

Example 2.2 in the textbook explains the source of wage inequality in the United States. In terms of supply and demand, the wage of skilled workers has:

The income elasticity of demand refers to:

Figure 2.4.1 -Refer to Figure 2.4.1. Between points B and C, demand is:

Which of the following will cause the price of beer to rise?

Scenario 2.1: The demand for books is: Q_d = 120 - P The supply of books is: Q_s = 5P -Refer to Scenario 2.1. If P = $25, which of the following is true?

Scenario 2.1: The demand for books is: Q_d = 120 - P The supply of books is: Q_s = 5P -Refer to Scenario 2.1. If P = $15, which of the following is true?

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:

Preliminaries

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 2: The Basics of Supply and Demand

In the long run, new firms can enter an industry and so the supply elasticity tends to be:

The price of good A goes up. As a result, the demand for good B shifts to the left. From this we can infer that:

Figure 2.5.6 -Refer to Figure 2.5.6. Which of the following best represents the market for coffee in the intermediate run?

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 c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to:

Coffee and cream:

Figure 2.3.3 -Refer to Figure 2.3.3 above. Which of the two panels best describes the trend in college costs from 1970 to 2016?

We observe that both the price of and quantity sold of golf balls are rising over time. This is due to:

You are analyzing the demand for good X. Which of the following will result in a shift to the right of the demand curve for X?

According to the textbook, the income elasticity of demand is:

The current market price for good X is below the equilibrium price, and then the demand curve for X shifts rightward. What is the likely outcome of the demand shift?

Example 2.2 in the textbook explains the source of wage inequality in the United States. In terms of supply and demand, the wage of skilled workers has:

The income elasticity of demand refers to:

Figure 2.4.1 -Refer to Figure 2.4.1. Between points B and C, demand is:

Which of the following will cause the price of beer to rise?

Scenario 2.1: The demand for books is: Qd = 120 - P The supply of books is: Qs = 5P -Refer to Scenario 2.1. If P = $25, which of the following is true?

Scenario 2.1: The demand for books is: Qd = 120 - P The supply of books is: Qs = 5P -Refer to Scenario 2.1. If P = $15, which of the following is true?

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:

Preliminaries

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Scenario 2.1: The demand for books is: Q_d = 120 - P The supply of books is: Q_s = 5P -Refer to Scenario 2.1. If P = $25, which of the following is true?

Scenario 2.1: The demand for books is: Q_d = 120 - P The supply of books is: Q_s = 5P -Refer to Scenario 2.1. If P = $15, which of the following is true?