Question 1

What type of market is a monopoly?

Accepted Answer

A)  with one seller 
B)  with few sellers 
C)  with one buyer 
D)  with many buyers 
A)  with one seller 
B)  with few sellers 
C)  with one buyer 
D)  with many buyers

Question 2

Market demand is given as QD = 120 - P. Market supply is given as QS = 4P. If price increases from $60 to $65, what is the price elasticity of demand?

Accepted Answer

A)  0.1 
B)  0.9 
C)  1.1 
D)  2.1 
A)  0.1 
B)  0.9 
C)  1.1 
D)  2.1

Question 3

What is the relationship between price and quantity supplied?

Accepted Answer

A)  negative, or inverse 
B)  positive, or direct 
C)  nonexistent 
D)  the same as the relationship between price and quantity demanded 
A)  negative, or inverse 
B)  positive, or direct 
C)  nonexistent 
D)  the same as the relationship between price and quantity demanded

Question 4

If a decrease in income increases the demand for a good, what is the good called?

Accepted Answer

A)  a substitute good 
B)  a complementary good 
C)  a normal good 
D)  an inferior good 
A)  a substitute good 
B)  a complementary good 
C)  a normal good 
D)  an inferior good

Question 5

Market demand is given as QD = 300 - 3P. Market supply is given as QS = 2P + 100. If price increases from $10 to $15, what is the price elasticity of demand?

Accepted Answer

A)  0.14 
B)  1.4 
C)  3.7 
D)  7.3 
A)  0.14 
B)  1.4 
C)  3.7 
D)  7.3

Question 6

Figure 4-7
  
-Refer to the Figure 4-7. What would cause the movement from point B to point A on the graph?

Accepted Answer

A)  an increase in price 
B)  a decrease in price 
C)  a decrease in the price of a substitute good 
D)  an increase in income 
A)  an increase in price 
B)  a decrease in price 
C)  a decrease in the price of a substitute good 
D)  an increase in income

Question 7

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

Accepted Answer

A)  The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. 
B)  The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. 
A)  The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. 
B)  The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. 
C)  Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 
D)  Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Question 8

Figure 4-4
  
-Refer to the Figure 4-4. If the price is $15, what would the quantity supplied be?

Accepted Answer

A)  400 
B)  600 
C)  700 
D)  800 
A)  400 
B)  600 
C)  700 
D)  800

Question 9

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Accepted Answer

A) True 
 B)False

Question 10

What is on the vertical axis of a demand graph?

Accepted Answer

A)  income 
B)  quantity 
C)  cost of production 
D)  price 
A)  income 
B)  quantity 
C)  cost of production 
D)  price

Question 11

If the demand for a good falls when income falls, the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 12

Which would NOT be a role that prices play in a market economy?

Accepted Answer

A)  Prices guide economic decisions and thereby allocate scarce resources. 
B)  Prices ensure that quantities supplied and demanded are in balance. 
C)  Prices ensure an equal distribution of goods and services. 
D)  Prices influence how much of a good buyers choose to purchase and how much sellers choose to produce. 
A)  Prices guide economic decisions and thereby allocate scarce resources. 
B)  Prices ensure that quantities supplied and demanded are in balance. 
C)  Prices ensure an equal distribution of goods and services. 
D)  Prices influence how much of a good buyers choose to purchase and how much sellers choose to produce.

Question 13

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied, what do we know?

Accepted Answer

A)  The former is a shift of the curve and the latter is a movement along the curve. 
B)  The former is a movement along the curve and the latter is a shift of the curve. 
C)  Both are shifts of the supply curve. 
D)  Both are movements along the curve. 
A)  The former is a shift of the curve and the latter is a movement along the curve. 
B)  The former is a movement along the curve and the latter is a shift of the curve. 
C)  Both are shifts of the supply curve. 
D)  Both are movements along the curve.

Question 14

Why does market price prevail in a perfectly competitive market?

Accepted Answer

A)  because there are few sellers 
B)  because the market is unregulated 
C)  because there are distinctive products 
D)  because no one has market power 
A)  because there are few sellers 
B)  because the market is unregulated 
C)  because there are distinctive products 
D)  because no one has market power

Question 15

What does the law of demand imply?

Accepted Answer

A)  price and quantity supplied are inversely related 
B)  price and quantity demanded are inversely related 
C)  price and quantity demanded are positively related 
D)  price and quantity supplied are positively related 
A)  price and quantity supplied are inversely related 
B)  price and quantity demanded are inversely related 
C)  price and quantity demanded are positively related 
D)  price and quantity supplied are positively related

Question 16

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $3 to $5, what is the price elasticity of demand?

Accepted Answer

A)  0.3 
B)  0.6 
C)  1.7 
D)  3.4 
A)  0.3 
B)  0.6 
C)  1.7 
D)  3.4

Question 17

The market demand is the average of all of the individual demands for a particular good or service.

Accepted Answer

A) True 
 B)False

Question 18

Figure 4-4
  
-Refer to the Figure 4-4. In this market, what would the equilibrium price and quantity be?

Accepted Answer

A)  $15 and 700 
B)  $20 and 600 
C)  $25 and 500 
D)  $25 and 800 
A)  $15 and 700 
B)  $20 and 600 
C)  $25 and 500 
D)  $25 and 800

Question 19

Workers at a bicycle assembly plant currently make minimum wage. If the provincial government increases the minimum wage by $1.00 an hour, what will likely happen?

Accepted Answer

A)  Demand for bicycle assembly workers will increase. 
B)  Supply of bicycles will shift to the right. 
C)  Supply of bicycles will shift to the left. 
D)  The firm must increase output to maintain profit levels. 
A)  Demand for bicycle assembly workers will increase. 
B)  Supply of bicycles will shift to the right. 
C)  Supply of bicycles will shift to the left. 
D)  The firm must increase output to maintain profit levels.

Question 20

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose?

Accepted Answer

A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous 
A)  price will fall and the effect on quantity is ambiguous 
B)  price will rise and the effect on quantity is ambiguous 
C)  quantity will fall and the effect on price is ambiguous 
D)  quantity will rise and the effect on price is ambiguous

What type of market is a monopoly?

Market demand is given as QD = 120 - P. Market supply is given as QS = 4P. If price increases from $60 to $65, what is the price elasticity of demand?

What is the relationship between price and quantity supplied?

If a decrease in income increases the demand for a good, what is the good called?

Market demand is given as QD = 300 - 3P. Market supply is given as QS = 2P + 100. If price increases from $10 to $15, what is the price elasticity of demand?

Figure 4-7 -Refer to the Figure 4-7. What would cause the movement from point B to point A on the graph?

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

Figure 4-4 -Refer to the Figure 4-4. If the price is $15, what would the quantity supplied be?

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

What is on the vertical axis of a demand graph?

If the demand for a good falls when income falls, the good is called an inferior good.

Which would NOT be a role that prices play in a market economy?

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied, what do we know?

Why does market price prevail in a perfectly competitive market?

What does the law of demand imply?

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $3 to $5, what is the price elasticity of demand?

The market demand is the average of all of the individual demands for a particular good or service.

Figure 4-4 -Refer to the Figure 4-4. In this market, what would the equilibrium price and quantity be?

Workers at a bicycle assembly plant currently make minimum wage. If the provincial government increases the minimum wage by $1.00 an hour, what will likely happen?

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose?

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

What type of market is a monopoly?

Market demand is given as QD = 120 - P. Market supply is given as QS = 4P. If price increases from $60 to $65, what is the price elasticity of demand?

What is the relationship between price and quantity supplied?

If a decrease in income increases the demand for a good, what is the good called?

Market demand is given as QD = 300 - 3P. Market supply is given as QS = 2P + 100. If price increases from $10 to $15, what is the price elasticity of demand?

Figure 4-7 -Refer to the Figure 4-7. What would cause the movement from point B to point A on the graph?

Suppose that the incomes of buyers in a particular market for a normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

Figure 4-4 -Refer to the Figure 4-4. If the price is $15, what would the quantity supplied be?

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

What is on the vertical axis of a demand graph?

If the demand for a good falls when income falls, the good is called an inferior good.

Which would NOT be a role that prices play in a market economy?

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied, what do we know?

Why does market price prevail in a perfectly competitive market?

What does the law of demand imply?

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $3 to $5, what is the price elasticity of demand?

The market demand is the average of all of the individual demands for a particular good or service.

Figure 4-4 -Refer to the Figure 4-4. In this market, what would the equilibrium price and quantity be?

Workers at a bicycle assembly plant currently make minimum wage. If the provincial government increases the minimum wage by $1.00 an hour, what will likely happen?

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers rose and the price of tea rose?

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

Filters