Question 1

The law of demand

Accepted Answer

A) was passed by the 102nd U.S. Congress. 
B) is a natural law, much like the law of gravity. 
C) is considered a "law" in economics because of the overwhelming empirical evidence that supports its logic. 
D) is considered a "law" in economics in order to force economic models to operate fully. 
A) was passed by the 102nd U.S. Congress. 
B) is a natural law, much like the law of gravity. 
C) is considered a "law" in economics because of the overwhelming empirical evidence that supports its logic. 
D) is considered a "law" in economics in order to force economic models to operate fully. C

Question 2

Costs that pertain to finding a trading partner and making a trade are called

Accepted Answer

A) transaction costs. 
B) transgression costs. 
C) consumption costs. 
D) transaction taxes. 
A) transaction costs. 
B) transgression costs. 
C) consumption costs. 
D) transaction taxes. A

Question 3

A change in a relevant factor other than the price of the good itself causes a ________ the demand curve, and a change in a good's own price causes a ________ the demand curve.

Accepted Answer

A) shift of; shift of 
B) shift of; movement along 
C) movement along; shift of 
D) movement along; movement along 
A) shift of; shift of 
B) shift of; movement along 
C) movement along; shift of 
D) movement along; movement along B

Question 4

Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50. Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?

Accepted Answer

In all cases, total expenditure equals 1

Question 5

In the labor market, if the government imposes a minimum wage that is below the equilibrium wage, then

Accepted Answer

A) workers who wish to work at the minimum wage will have a difficult time finding jobs. 
B) firms will hire fewer workers than without the minimum wage law. 
C) some workers may lose their jobs as a result. 
D) nothing will happen to the wage rate or employment. 
A) workers who wish to work at the minimum wage will have a difficult time finding jobs. 
B) firms will hire fewer workers than without the minimum wage law. 
C) some workers may lose their jobs as a result. 
D) nothing will happen to the wage rate or employment.

Question 6

The quantity of a good that consumers demand depends only on the price of the good.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a characteristic of perfectly competitive markets?

Accepted Answer

A) Buying the product requires you to hire a lawyer to write a contract. 
B) All market participants are price-takers. 
C) You are the only buyer of the product. 
D) All products are identical. 
A) Buying the product requires you to hire a lawyer to write a contract. 
B) All market participants are price-takers. 
C) You are the only buyer of the product. 
D) All products are identical.

Question 8

If the price of a pizza were to increase to $50, many people would give up eating pizza while others would continue to eat it. This would indicate

Accepted Answer

A) those who are buying pizza value it at least $50 per pizza. 
B) those who are not buying pizza value it more than $50 per pizza. 
C) only those who are extremely wealthy are buying pizza. 
D) the price of pizza needs to be regulated by the federal government. 
A) those who are buying pizza value it at least $50 per pizza. 
B) those who are not buying pizza value it more than $50 per pizza. 
C) only those who are extremely wealthy are buying pizza. 
D) the price of pizza needs to be regulated by the federal government.

Question 9

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

Accepted Answer

A) the supply curve for soda pop to shift to the right. 
B) the supply curve for soda pop to become more vertical. 
C) the demand curve for soda pop to shift to the right. 
D) the demand curve for soda pop to shift to the left. 
A) the supply curve for soda pop to shift to the right. 
B) the supply curve for soda pop to become more vertical. 
C) the demand curve for soda pop to shift to the right. 
D) the demand curve for soda pop to shift to the left.

Question 10

-The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than

Accepted Answer

A) $0. 
B) $5. 
C) $12. 
D) $14. 
A) $0. 
B) $5. 
C) $12. 
D) $14.

Question 11

If the demand for eBook readers increases and the supply of eBook readers increases, then

Accepted Answer

A) it is clear that prices will increase, the change in the quantity of eBook readers sold is ambiguous. 
B) it is clear that prices will decrease, the change in the quantity of eBook readers sold is ambiguous. 
C) it is clear that quantity sold will increase, the change in the price of eBook readers is ambiguous. 
D) it is clear that quantity sold will decrease, the change in the price of eBook readers is ambiguous. 
A) it is clear that prices will increase, the change in the quantity of eBook readers sold is ambiguous. 
B) it is clear that prices will decrease, the change in the quantity of eBook readers sold is ambiguous. 
C) it is clear that quantity sold will increase, the change in the price of eBook readers is ambiguous. 
D) it is clear that quantity sold will decrease, the change in the price of eBook readers is ambiguous.

Question 12

If the government places a $1.20 tax on each pizza sold,

Accepted Answer

A) consumers will have to pay $1.20 more for each pizza they buy. 
B) the supply curve will shift left by $1.20. 
C) the demand curve will shift right by $1.20. 
D) both the demand curve and the supply curve will shift by 60 cents each. 
A) consumers will have to pay $1.20 more for each pizza they buy. 
B) the supply curve will shift left by $1.20. 
C) the demand curve will shift right by $1.20. 
D) both the demand curve and the supply curve will shift by 60 cents each.

Question 13

A price floor that is set above the equilibrium price

Accepted Answer

A) causes suppliers to lower their prices. 
B) is binding. 
C) is non-binding. 
D) creates a shortage. 
A) causes suppliers to lower their prices. 
B) is binding. 
C) is non-binding. 
D) creates a shortage.

Question 14

A price ceiling that is set below the equilibrium price

Accepted Answer

A) causes suppliers to raise their prices. 
B) is binding. 
C) is non-binding. 
D) creates a surplus. 
A) causes suppliers to raise their prices. 
B) is binding. 
C) is non-binding. 
D) creates a surplus.

Question 15

The owner of a railroad that carries cargo should ________ supply when she foresees regulations that will ________ the cost of shipping cargo by truck.

Accepted Answer

A) decrease; increase 
B) decrease; leave unchanged 
C) increase; increase 
D) leave unchanged; increase 
A) decrease; increase 
B) decrease; leave unchanged 
C) increase; increase 
D) leave unchanged; increase

Question 16

It is appropriate to use the supply-and-demand model if, in a market,

Accepted Answer

A) everyone is a price taker with full information about the price and quality of the good. 
B) firms sell identical products. 
C) costs of trading are low. 
D) All of the above. 
A) everyone is a price taker with full information about the price and quality of the good. 
B) firms sell identical products. 
C) costs of trading are low. 
D) All of the above.

Question 17

Supply curves

Accepted Answer

A) slope upward. 
B) slope downward. 
C) are horizontal. 
D) can have many shapes. 
A) slope upward. 
B) slope downward. 
C) are horizontal. 
D) can have many shapes.

Question 18

A rightward shift of the supply curve in a market with a downward-sloping demand curve will lead to a(n)

Accepted Answer

A) decrease in equilibrium price. 
B) excess supply at the old equilibrium price. 
C) increase in quantity demanded. 
D) All of the above. 
A) decrease in equilibrium price. 
B) excess supply at the old equilibrium price. 
C) increase in quantity demanded. 
D) All of the above.

Question 19

-The above figure shows a graph of a market for pizzas in a large town. At a price of $7, what is the amount of excess demand?

Accepted Answer

A) 0; there is excess supply at $7. 
B) 20 units 
C) 30 units 
D) 10 units 
A) 0; there is excess supply at $7. 
B) 20 units 
C) 30 units 
D) 10 units

Question 20

Suppose the following information is known about a market:
1. Sellers will not sell at all below a price of $2.
2. At a price of $10, any given seller will sell 10 units.
3. There are 100 identical sellers in the market.
Assuming a linear supply curve, use this information to derive the market supply curve.

Accepted Answer

First, Q = 100q since all firms are iden

The law of demand

Costs that pertain to finding a trading partner and making a trade are called

A change in a relevant factor other than the price of the good itself causes a the demand curve, and a change in a good's own price causes a the demand curve.

Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50. Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?

In the labor market, if the government imposes a minimum wage that is below the equilibrium wage, then

The quantity of a good that consumers demand depends only on the price of the good.

Which of the following is NOT a characteristic of perfectly competitive markets?

If the price of a pizza were to increase to $50, many people would give up eating pizza while others would continue to eat it. This would indicate

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

-The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than

If the demand for eBook readers increases and the supply of eBook readers increases, then

If the government places a $1.20 tax on each pizza sold,

A price floor that is set above the equilibrium price

A price ceiling that is set below the equilibrium price

The owner of a railroad that carries cargo should supply when she foresees regulations that will the cost of shipping cargo by truck.

It is appropriate to use the supply-and-demand model if, in a market,

Supply curves

A rightward shift of the supply curve in a market with a downward-sloping demand curve will lead to a(n)

-The above figure shows a graph of a market for pizzas in a large town. At a price of $7, what is the amount of excess demand?

Introduction

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 2: Supply and Demand

The law of demand

Costs that pertain to finding a trading partner and making a trade are called

A change in a relevant factor other than the price of the good itself causes a ________ the demand curve, and a change in a good's own price causes a ________ the demand curve.

Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50. Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?

In the labor market, if the government imposes a minimum wage that is below the equilibrium wage, then

The quantity of a good that consumers demand depends only on the price of the good.

Which of the following is NOT a characteristic of perfectly competitive markets?

If the price of a pizza were to increase to $50, many people would give up eating pizza while others would continue to eat it. This would indicate

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

-The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than

If the demand for eBook readers increases and the supply of eBook readers increases, then

If the government places a $1.20 tax on each pizza sold,

A price floor that is set above the equilibrium price

A price ceiling that is set below the equilibrium price

The owner of a railroad that carries cargo should ________ supply when she foresees regulations that will ________ the cost of shipping cargo by truck.

It is appropriate to use the supply-and-demand model if, in a market,

Supply curves

A rightward shift of the supply curve in a market with a downward-sloping demand curve will lead to a(n)

-The above figure shows a graph of a market for pizzas in a large town. At a price of $7, what is the amount of excess demand?

Introduction

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

A change in a relevant factor other than the price of the good itself causes a the demand curve, and a change in a good's own price causes a the demand curve.

The owner of a railroad that carries cargo should supply when she foresees regulations that will the cost of shipping cargo by truck.