Question 1

Suppose donuts are currently selling for $10 per dozen. The equilibrium price of donuts is $12 per dozen. What would we expect?

Accepted Answer

A)  a shortage to exist and the market price of donuts to increase 
B)  a shortage to exist and the market price of donuts to decrease 
C)  a surplus to exist and the market price of donuts to increase 
D)  a surplus to exist and the market price of donuts to decrease 
A)  a shortage to exist and the market price of donuts to increase 
B)  a shortage to exist and the market price of donuts to decrease 
C)  a surplus to exist and the market price of donuts to increase 
D)  a surplus to exist and the market price of donuts to decrease A

Question 2

Holding the other determinants of supply constant, what would a change in price do?

Accepted Answer

A)  result in a change in supply 
B)  have no effect on the quantity supplied 
C)  result in a shift of demand 
D)  result in a movement along a stable supply curve 
A)  result in a change in supply 
B)  have no effect on the quantity supplied 
C)  result in a shift of demand 
D)  result in a movement along a stable supply curve D

Question 3

An increase in the price of pizza will shift the demand curve for pizza to the left.

Accepted Answer

A) True 
 B)False  False

Question 4

What is an example of complementary goods?

Accepted Answer

A)  hamburgers and hot dogs 
B)  lawnmowers and automobiles 
C)  cereal and milk 
D)  wine and beer 
A)  hamburgers and hot dogs 
B)  lawnmowers and automobiles 
C)  cereal and milk 
D)  wine and beer

Question 5

A market is a group of buyers and sellers of a particular product.

Accepted Answer

A) True 
 B)False

Question 6

Market demand is given as QD = 140 - 5P. Market supply is given as QS = 2P. If price increases from $25 to $27, what is the price elasticity of demand?

Accepted Answer

A)  0.013 
B)  0.13 
C)  1.3 
D)  13.0 
A)  0.013 
B)  0.13 
C)  1.3 
D)  13.0

Question 7

If Francis receives a decrease in his pay, what would we expect?

Accepted Answer

A)  Francis's demand for each good he purchases to remain unchanged 
B)  Francis's demand for normal goods to increase 
C)  Francis's demand for luxury goods to increase 
D)  Francis's demand for inferior goods to increase 
A)  Francis's demand for each good he purchases to remain unchanged 
B)  Francis's demand for normal goods to increase 
C)  Francis's demand for luxury goods to increase 
D)  Francis's demand for inferior goods to increase

Question 8

Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and quantity have changed.
a. Winter starts and the weather turns sharply colder.
b. The price of tea, a substitute for hot chocolate, falls.
c. The price of cocoa beans decreases.
d. The price of whipped cream falls.
e. A better method of harvesting cocoa beans is introduced.
f. The Canadian Medical Association announces that hot chocolate cures acne.
g. Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.
h. Consumer income falls because of a recession and hot chocolate is considered a normal good.
i. Producers expect the price of hot chocolate to increase next month.
j. Currently, the price of hot chocolate is $0.50 per cup above equilibrium.

Accepted Answer

The answer of Suppose we are analyzing the market for...

Question 9

Market demand is given as Qd = 200 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Accepted Answer

A)  a shortage of 50 
B)  a surplus of 50 
C)  a surplus of 200 
D)  a shortage of 200 
A)  a shortage of 50 
B)  a surplus of 50 
C)  a surplus of 200 
D)  a shortage of 200

Question 10

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $48 to $52, what is the price elasticity of demand?

Accepted Answer

A)  0 
B)  0.1 
C)  3.2 
D)  11.0 
A)  0 
B)  0.1 
C)  3.2 
D)  11.0

Question 11

What does the number of buyers affect?

Accepted Answer

A)  the market demand curve 
B)  all individual demand curves 
C)  the market supply curve 
D)  all individual supply curves 
A)  the market demand curve 
B)  all individual demand curves 
C)  the market supply curve 
D)  all individual supply curves

Question 12

Market demand is given as Qd = 95- P. Market supply is given as Qs = 3P + 15. What would result if the market price were $25?

Accepted Answer

A)  a shortage of 20 
B)  a surplus of 20 
C)  a surplus of 40 
D)  a shortage of 40 
A)  a shortage of 20 
B)  a surplus of 20 
C)  a surplus of 40 
D)  a shortage of 40

Question 13

Market demand is given as QD = 75 - P. Market supply is given as QS = 3P + 15. If price increases from $5 to $7, what is the price elasticity of demand?

Accepted Answer

A)  0.1 
B)  0.3 
C)  1.1 
D)  2.3 
A)  0.1 
B)  0.3 
C)  1.1 
D)  2.3

Question 14

Figure 4-10
  
-Refer to the Figure 4-10. What is the movement from point A to point B on the graph called?

Accepted Answer

A)  a decrease in supply 
B)  an increase in supply 
C)  an increase in the quantity supplied 
D)  a decrease in the quantity supplied 
A)  a decrease in supply 
B)  an increase in supply 
C)  an increase in the quantity supplied 
D)  a decrease in the quantity supplied

Question 15

Which of the following would NOT affect an individual's demand curve?

Accepted Answer

A)  expectations 
B)  income 
C)  price of related goods 
D)  the number of buyers 
A)  expectations 
B)  income 
C)  price of related goods 
D)  the number of buyers

Question 16

Market demand is given as Qd =300 - 2P. Market supply is given as Qs = 2P + 100. What would result if the market price were $30?

Accepted Answer

A)  a shortage of 110 
B)  a surplus of 110 
C)  a surplus of 50 
D)  a shortage of 80 
A)  a shortage of 110 
B)  a surplus of 110 
C)  a surplus of 50 
D)  a shortage of 80

Question 17

Most studies indicate that low cigarette prices are associated with greater use of marijuana. What type of goods does this indicate that cigarettes and marijuana are?

Accepted Answer

A)  substitute goods 
B)  complementary goods 
C)  not related since one is legal and one is illegal 
D)  inferior goods 
A)  substitute goods 
B)  complementary goods 
C)  not related since one is legal and one is illegal 
D)  inferior goods

Question 18

Figure 4-5
  
-Refer to the Figure 4-5. Which of the four graphs represents the market for school supplies in September?

Accepted Answer

A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D 
A)  graph A 
B)  graph B 
C)  graph C 
D)  graph D

Question 19

Market demand is given as Qd = 80 - 2P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)  price will be $20 and quantity will be 10 
B)  price will be $20 and quantity will be 40 
C)  price will be $10 and quantity will be 20 
D)  price will be $40 and quantity will be 20 
A)  price will be $20 and quantity will be 10 
B)  price will be $20 and quantity will be 40 
C)  price will be $10 and quantity will be 20 
D)  price will be $40 and quantity will be 20

Question 20

Figure 4-4
  
-Refer to the Figure 4-4. If the price is $25, what would happen?

Accepted Answer

A)  There would be a surplus of 300 and the price would fall. 
B)  There would be a surplus of 200 and the price would fall. 
C)  There would be a shortage of 200 and the price would rise. 
D)  There would be a shortage of 300 and the price would rise. 
A)  There would be a surplus of 300 and the price would fall. 
B)  There would be a surplus of 200 and the price would fall. 
C)  There would be a shortage of 200 and the price would rise. 
D)  There would be a shortage of 300 and the price would rise.

Suppose donuts are currently selling for $10 per dozen. The equilibrium price of donuts is $12 per dozen. What would we expect?

Holding the other determinants of supply constant, what would a change in price do?

An increase in the price of pizza will shift the demand curve for pizza to the left.

What is an example of complementary goods?

A market is a group of buyers and sellers of a particular product.

Market demand is given as QD = 140 - 5P. Market supply is given as QS = 2P. If price increases from $25 to $27, what is the price elasticity of demand?

If Francis receives a decrease in his pay, what would we expect?

Market demand is given as Qd = 200 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $48 to $52, what is the price elasticity of demand?

What does the number of buyers affect?

Market demand is given as Qd = 95- P. Market supply is given as Qs = 3P + 15. What would result if the market price were $25?

Market demand is given as QD = 75 - P. Market supply is given as QS = 3P + 15. If price increases from $5 to $7, what is the price elasticity of demand?

Figure 4-10 -Refer to the Figure 4-10. What is the movement from point A to point B on the graph called?

Which of the following would NOT affect an individual's demand curve?

Market demand is given as Qd =300 - 2P. Market supply is given as Qs = 2P + 100. What would result if the market price were $30?

Most studies indicate that low cigarette prices are associated with greater use of marijuana. What type of goods does this indicate that cigarettes and marijuana are?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for school supplies in September?

Market demand is given as Qd = 80 - 2P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Figure 4-4 -Refer to the Figure 4-4. If the price is $25, what would happen?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 4: The Market Forces of Supply and Demand

Suppose donuts are currently selling for $10 per dozen. The equilibrium price of donuts is $12 per dozen. What would we expect?

Holding the other determinants of supply constant, what would a change in price do?

An increase in the price of pizza will shift the demand curve for pizza to the left.

What is an example of complementary goods?

A market is a group of buyers and sellers of a particular product.

Market demand is given as QD = 140 - 5P. Market supply is given as QS = 2P. If price increases from $25 to $27, what is the price elasticity of demand?

If Francis receives a decrease in his pay, what would we expect?

Market demand is given as Qd = 200 - 6P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $48 to $52, what is the price elasticity of demand?

What does the number of buyers affect?

Market demand is given as Qd = 95- P. Market supply is given as Qs = 3P + 15. What would result if the market price were $25?

Market demand is given as QD = 75 - P. Market supply is given as QS = 3P + 15. If price increases from $5 to $7, what is the price elasticity of demand?

Figure 4-10 -Refer to the Figure 4-10. What is the movement from point A to point B on the graph called?

Which of the following would NOT affect an individual's demand curve?

Market demand is given as Qd =300 - 2P. Market supply is given as Qs = 2P + 100. What would result if the market price were $30?

Most studies indicate that low cigarette prices are associated with greater use of marijuana. What type of goods does this indicate that cigarettes and marijuana are?

Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs represents the market for school supplies in September?

Market demand is given as Qd = 80 - 2P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Figure 4-4 -Refer to the Figure 4-4. If the price is $25, what would happen?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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