Question 1

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D1 is described by this equation:

Accepted Answer

A)  Q = 0.75 - P 
B)  Q = 6 - 0.75P 
C)  Q = 8 - 1.33P 
D)  P = 6 - 8P 
A)  Q = 0.75 - P 
B)  Q = 6 - 0.75P 
C)  Q = 8 - 1.33P 
D)  P = 6 - 8P B

Question 2

Determine the equation for both normal and inverse demand equations using the information in the associated graph.

Accepted Answer

First, since the graph shows a linear demand curve, the generic form of the equation will be y = mx +
b. To find the inverse demand equation, first replace y with P and x with Q^D to get P = mQ^D +
b. The y-intercept, b, will be the price when quantity demanded is zero, which we determine from the graph to be $6, so P = mQ^D + 6. Finally, slope is the change in price due to a change in quantity for the inverse demand curve, which in this case is -6/12, or -0.5. Plugging this into the equation leads to the inverse demand equation of P = -0.5Q^D + 6. To find the normal demand equation, solve the inverse demand equation for Q^D:
P = -0.5Q^D + 6
P - 6 = -0.5Q^D
Q^D = -2P + 12

Question 3

In the standard model, we expect the partial derivative of quantity supplied with respect to input price to be:

Accepted Answer

A)  positive. 
B)  negative. 
C)  either positive or negative. 
D)  Cannot make a clear determination with the given information. 
A)  positive. 
B)  negative. 
C)  either positive or negative. 
D)  Cannot make a clear determination with the given information. B

Question 4

Assume that the elasticity of supply is 1.59. If the price of the product increases by 10%, by how much do we expect the quantity supplied to increase?

Accepted Answer

An elasticity of supply equal to 1.59 is

Question 5

In the market for good X, demand is QD = 6,000 - 0.8P and supply is QS = 0.4P - 300. Which of the following is the inverse supply equation?

Accepted Answer

A)  P = 6,000 + 0.8Q 
B)  P = 300 + 0.4Q 
C)  P = 7,500 + 1.25Q 
D)  P = 750 + 2.5Q 
A)  P = 6,000 + 0.8Q 
B)  P = 300 + 0.4Q 
C)  P = 7,500 + 1.25Q 
D)  P = 750 + 2.5Q

Question 6

Suppose that the demand and supply curves for a good are given by QD = 1,000/P and QS = 10P.
a. What are the equilibrium price and equilibrium quantity?
b. Explain what is happening in the market at a price of $2.
c. Explain what is happening in the market at a price of $20.

Accepted Answer

a. Q^D = Q^S 1,000/P = 10P. P² = 100 P = 10 Q

Question 7

Suppose that the extended supply curve for children's books can be expressed as   
, where Pp is the price of colored paper. Using calculus, determine whether the quantity supplied of children's books increases or decreases as the price of colored paper increases.

Accepted Answer

Suggested Answer:
Since @#IMG-DLM& , we know that

Question 8

Given the information in the associated graph, determine the equation for the inverse demand.

Accepted Answer

A)  P = 12 - 2Q 
B)  P = 12 - .5Q 
C)  P = 6 - 2Q 
D)  P = 6 - 0.5Q 
A)  P = 12 - 2Q 
B)  P = 12 - .5Q 
C)  P = 6 - 2Q 
D)  P = 6 - 0.5Q

Question 9

Suppose that the supply of oil to Pittsburgh, Pennsylvania is perfectly elastic. If more people move to Pittsburgh because of its great football and hockey teams, what happens to the equilibrium price and quantity of oil in Pittsburgh?

Accepted Answer

A)  Both the equilibrium price and the quantity increase. 
B)  The equilibrium price increases, but the equilibrium quantity is unchanged. 
C)  The equilibrium quantity increases, but the equilibrium price is unchanged. 
D)  Both the equilibrium price and the quantity are unchanged. 
A)  Both the equilibrium price and the quantity increase. 
B)  The equilibrium price increases, but the equilibrium quantity is unchanged. 
C)  The equilibrium quantity increases, but the equilibrium price is unchanged. 
D)  Both the equilibrium price and the quantity are unchanged.

Question 10

Suppose that watermelon, with price PW, and barbecue sauce are related goods. The expanded demand curve for barbecue sauce, then, is   
. Suppose that PW is $5 per watermelon. Use calculus to determine whether watermelon is complementary to or a substitute for barbecue sauce.

Accepted Answer

Suggested Answer:
Since the pa

Question 11

Suppose that the market demand curve for sunflowers is a function of the price of sunflowers, the price of roses, and income. If the partial derivative of quantity demanded of sunflowers with respect to the price of roses is negative, sunflowers and roses are:

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods. 
A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods.

Question 12

(Figure: Demand Shifts II) Using the figure, which factor could cause the demand curve to shift out from D1 to D2?

Accepted Answer

A)  an increase in the price of a complement good 
B)  a decrease in the number of consumers 
C)  a decrease in the price of a complement good 
D)  an decrease in the price of the good 
A)  an increase in the price of a complement good 
B)  a decrease in the number of consumers 
C)  a decrease in the price of a complement good 
D)  an decrease in the price of the good

Question 13

(Figure: Price Elasticity of Demand I) What is the price elasticity of demand at point A?

Accepted Answer

A)  -2.6 
B)  -1.54 
C)  -0.7 
D)  -3.2 
A)  -2.6 
B)  -1.54 
C)  -0.7 
D)  -3.2

Question 14

Which of the following factors influences demand?

Accepted Answer

A)  prices of inputs 
B)  production technology 
C)  the number of producers 
D)  prices of complement goods 
A)  prices of inputs 
B)  production technology 
C)  the number of producers 
D)  prices of complement goods

Question 15

In the market for good X, demand is QD = 6,000 - 0.8P and supply is QS = 0.4P - 300. What is the equilibrium quantity?

Accepted Answer

A)  1,200 
B)  1,800 
C)  4,800 
D)  5,250
Indicate one or more answer choices that best complete the statement or answer the question. 
A)  1,200 
B)  1,800 
C)  4,800 
D)  5,250
Indicate one or more answer choices that best complete the statement or answer the question.

Question 16

According to political journalist Michael Kinsley, "The price of oil shoots up; we start using less; reduced demand sends the price down; we start using more; pretty soon it's shooting up again." Explain whether you agree or disagree with Kinsley's assessment of oil markets.

Accepted Answer

Disagree. Kinsley is

Question 17

Which of the following will not cause demand for apples to increase or decrease?

Accepted Answer

A)  a reduction in the price of apples 
B)  a reduction in the price of a complement for apples 
C)  an increase in income 
D)  a decrease in the number of consumers in the market 
A)  a reduction in the price of apples 
B)  a reduction in the price of a complement for apples 
C)  an increase in income 
D)  a decrease in the number of consumers in the market

Question 18

Suppose that the market demand curve for cauliflower is a function of the price of cauliflower, the price of broccoli, and income. If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, cauliflower and broccoli are:

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods. 
A)  substitutes. 
B)  complements. 
C)  normal goods. 
D)  inferior goods.

Question 19

Suppose that the demand for a product is given by Q = 25 - 0.25P. The inverse demand is:

Accepted Answer

A)  P = 100 - 4Q 
B)  P = 25 - 4Q 
C)  P = 25 - 0.25Q 
D)  P = 100 + 4Q 
A)  P = 100 - 4Q 
B)  P = 25 - 4Q 
C)  P = 25 - 0.25Q 
D)  P = 100 + 4Q

Question 20

Suppose that the supply of a good is given by Q = -50 + 5P, where Q is the quantity supplied and P is the price measured in dollars per unit. This equation indicates that the quantity supplied increases by _____ units for every dollar increase in price.

Accepted Answer

A)  5 
B)  45 
C)  50 
D)  55 
A)  5 
B)  45 
C)  50 
D)  55

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D₁ is described by this equation:

Determine the equation for both normal and inverse demand equations using the information in the associated graph.

In the standard model, we expect the partial derivative of quantity supplied with respect to input price to be:

Assume that the elasticity of supply is 1.59. If the price of the product increases by 10%, by how much do we expect the quantity supplied to increase?

In the market for good X, demand is Q^D = 6,000 - 0.8P and supply is Q^S = 0.4P - 300. Which of the following is the inverse supply equation?

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. a. What are the equilibrium price and equilibrium quantity? b. Explain what is happening in the market at a price of $2. c. Explain what is happening in the market at a price of $20.

Suppose that the extended supply curve for children's books can be expressed as , where P_p is the price of colored paper. Using calculus, determine whether the quantity supplied of children's books increases or decreases as the price of colored paper increases.

Given the information in the associated graph, determine the equation for the inverse demand.

Suppose that the supply of oil to Pittsburgh, Pennsylvania is perfectly elastic. If more people move to Pittsburgh because of its great football and hockey teams, what happens to the equilibrium price and quantity of oil in Pittsburgh?

Suppose that watermelon, with price P_W, and barbecue sauce are related goods. The expanded demand curve for barbecue sauce, then, is . Suppose that P_W is $5 per watermelon. Use calculus to determine whether watermelon is complementary to or a substitute for barbecue sauce.

Suppose that the market demand curve for sunflowers is a function of the price of sunflowers, the price of roses, and income. If the partial derivative of quantity demanded of sunflowers with respect to the price of roses is negative, sunflowers and roses are:

(Figure: Demand Shifts II) Using the figure, which factor could cause the demand curve to shift out from D₁ to D₂?

(Figure: Price Elasticity of Demand I) What is the price elasticity of demand at point A?

Which of the following factors influences demand?

In the market for good X, demand is Q^D = 6,000 - 0.8P and supply is Q^S = 0.4P - 300. What is the equilibrium quantity?

According to political journalist Michael Kinsley, "The price of oil shoots up; we start using less; reduced demand sends the price down; we start using more; pretty soon it's shooting up again." Explain whether you agree or disagree with Kinsley's assessment of oil markets.

Which of the following will not cause demand for apples to increase or decrease?

Suppose that the market demand curve for cauliflower is a function of the price of cauliflower, the price of broccoli, and income. If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, cauliflower and broccoli are:

Suppose that the demand for a product is given by Q = 25 - 0.25P. The inverse demand is:

Suppose that the supply of a good is given by Q = -50 + 5P, where Q is the quantity supplied and P is the price measured in dollars per unit. This equation indicates that the quantity supplied increases by _____ units for every dollar increase in price.

Adventures in Microeconomics

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Exam 2: Supply and Demand

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D1 is described by this equation:

Determine the equation for both normal and inverse demand equations using the information in the associated graph.

In the standard model, we expect the partial derivative of quantity supplied with respect to input price to be:

Assume that the elasticity of supply is 1.59. If the price of the product increases by 10%, by how much do we expect the quantity supplied to increase?

In the market for good X, demand is QD = 6,000 - 0.8P and supply is QS = 0.4P - 300. Which of the following is the inverse supply equation?

Suppose that the demand and supply curves for a good are given by QD = 1,000/P and QS = 10P. a. What are the equilibrium price and equilibrium quantity? b. Explain what is happening in the market at a price of $2. c. Explain what is happening in the market at a price of $20.

Suppose that the extended supply curve for children's books can be expressed as , where Pp is the price of colored paper. Using calculus, determine whether the quantity supplied of children's books increases or decreases as the price of colored paper increases.

Given the information in the associated graph, determine the equation for the inverse demand.

Suppose that the supply of oil to Pittsburgh, Pennsylvania is perfectly elastic. If more people move to Pittsburgh because of its great football and hockey teams, what happens to the equilibrium price and quantity of oil in Pittsburgh?

Suppose that watermelon, with price PW, and barbecue sauce are related goods. The expanded demand curve for barbecue sauce, then, is . Suppose that PW is $5 per watermelon. Use calculus to determine whether watermelon is complementary to or a substitute for barbecue sauce.

Suppose that the market demand curve for sunflowers is a function of the price of sunflowers, the price of roses, and income. If the partial derivative of quantity demanded of sunflowers with respect to the price of roses is negative, sunflowers and roses are:

(Figure: Demand Shifts II) Using the figure, which factor could cause the demand curve to shift out from D1 to D2?

(Figure: Price Elasticity of Demand I) What is the price elasticity of demand at point A?

Which of the following factors influences demand?

In the market for good X, demand is QD = 6,000 - 0.8P and supply is QS = 0.4P - 300. What is the equilibrium quantity?

According to political journalist Michael Kinsley, "The price of oil shoots up; we start using less; reduced demand sends the price down; we start using more; pretty soon it's shooting up again." Explain whether you agree or disagree with Kinsley's assessment of oil markets.

Which of the following will not cause demand for apples to increase or decrease?

Suppose that the market demand curve for cauliflower is a function of the price of cauliflower, the price of broccoli, and income. If the partial derivative of quantity demanded of cauliflower with respect to the price of broccoli is positive, cauliflower and broccoli are:

Suppose that the demand for a product is given by Q = 25 - 0.25P. The inverse demand is:

Suppose that the supply of a good is given by Q = -50 + 5P, where Q is the quantity supplied and P is the price measured in dollars per unit. This equation indicates that the quantity supplied increases by _____ units for every dollar increase in price.

Adventures in Microeconomics

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

(Figure: Price and Quantity of Turkeys I) Mathematically, the demand curve D₁ is described by this equation:

In the market for good X, demand is Q^D = 6,000 - 0.8P and supply is Q^S = 0.4P - 300. Which of the following is the inverse supply equation?

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. a. What are the equilibrium price and equilibrium quantity? b. Explain what is happening in the market at a price of $2. c. Explain what is happening in the market at a price of $20.

Suppose that the extended supply curve for children's books can be expressed as , where P_p is the price of colored paper. Using calculus, determine whether the quantity supplied of children's books increases or decreases as the price of colored paper increases.

Suppose that watermelon, with price P_W, and barbecue sauce are related goods. The expanded demand curve for barbecue sauce, then, is . Suppose that P_W is $5 per watermelon. Use calculus to determine whether watermelon is complementary to or a substitute for barbecue sauce.

(Figure: Demand Shifts II) Using the figure, which factor could cause the demand curve to shift out from D₁ to D₂?

In the market for good X, demand is Q^D = 6,000 - 0.8P and supply is Q^S = 0.4P - 300. What is the equilibrium quantity?