Exam 2: The Basics of Supply and Demand

Which of the following would cause an unambiguous decrease in the real price of DVD players?

For automobile demand in the U.S., the income response tends to be larger in the:

Harding Enterprises has developed a new product called the Gillooly Shillelagh. The market demand for this product is given as follows: Q = 240 - 4P a. At what price is the price elasticity of demand equal to zero? b. At what price is demand infinitely elastic? c. At what price is the price elasticity of demand equal to one? d. If the shillelagh is priced at $40, what is the point price elasticity of demand?

When an industry's raw material costs increase, other things remaining the same,

Figure 2.5.1 -Refer to Figure 2.5.1 above. If close substitutes are difficult to find in the short run, which of the demand curves in the figure best represents market demand in the short run?

Suppose the supply of coal is perfectly inelastic, and the price elasticity of demand for coal is -0.4. If the government imposes a binding price ceiling for coal at a price that is 20 percent below the market equilibrium price, what is the impact of this policy on the market quantity?

The demand for a bushel of wheat in 1981 was given by the equation At a price of $3.46 per bushel, what is the price elasticity of demand? If the price of wheat falls to $3.27 per bushel, what happens to the revenue generated from the sale of wheat?

The currency used by the Confederate States of America during its brief existence from 1861 to 1865 has become a collector's item today. The Confederate Currency supply is perfectly inelastic. As the demand for the collectible increases and some of the old currency is destroyed or no longer of value as a collectible, what happens to the market price?

According to the textbook, for most goods and services-foods, beverages, entertainment, etc.-the income elasticity of demand is:

Along any downward-sloping straight-line demand curve:

Figure 2.4.3 -Refer to Figure 2.4.3 above. Which of the following best describes de demand curve in this figure?

Figure 2.5.4 -The secondary supply of copper is:

Figure 2.4.1 -Refer to Figure 2.4.1. At point A, demand is:

Figure 2.4.3 -Refer to Figure 2.4.3 above. The price elasticity of demand along this demand curve is equal to:

Suppose the market price for wheat changes, and we move from point A to point B on the wheat demand curve. If the price elasticity of wheat demand was -0.3 at point A and -0.4 at point B, what is a plausible value for the arc elasticity of demand for wheat between points A and B?

Which of the following represents the price elasticity of demand?

Other things being equal, the increase in rents that occurs after rent controls are abolished is smaller when:

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. What is the equilibrium price of books?

Suppose the U.S. government imposes a maximum price of $5 per gallon of gasoline, and the current equilibrium price is $3.50 per gallon. This policy represents a: