Question 1

If demand is elastic,an increase in price

Accepted Answer

A)  will increase total revenue 
B)  will decrease total revenue 
C)  will have an indeterminate effect on total revenue 
D)  will decrease total profit 
A)  will increase total revenue 
B)  will decrease total revenue 
C)  will have an indeterminate effect on total revenue 
D)  will decrease total profit B

Question 2

Which of the following is not typically a factor held constant when deriving a demand curve for clothing?

Accepted Answer

A)  consumer income. 
B)  the price of clothing. 
C)  the price of other goods. 
D)  consumer tastes. 
A)  consumer income. 
B)  the price of clothing. 
C)  the price of other goods. 
D)  consumer tastes. B

Question 3

The law of demand states :

Accepted Answer

A)  that price and quantity demanded are inversely related. 
B)  that price and quantity demanded are inversely related, holding all other factors that influence demand fixed. 
C)  that demand for a good comes from the desire of buyers to directly consume the good itself. 
D)  an increase in demand results in an increase in price. 
A)  that price and quantity demanded are inversely related. 
B)  that price and quantity demanded are inversely related, holding all other factors that influence demand fixed. 
C)  that demand for a good comes from the desire of buyers to directly consume the good itself. 
D)  an increase in demand results in an increase in price. B

Question 4

Consider the supply curve Qs = 40 + 2P + 6i.If the value of i rises,the supply curve will

Accepted Answer

A)  not shift at all 
B)  shift to the right 
C)  shift to the left 
D)  rotate so it becomes upward sloping 
A)  not shift at all 
B)  shift to the right 
C)  shift to the left 
D)  rotate so it becomes upward sloping

Question 5

A simultaneous shift to the right of both supply and demand will

Accepted Answer

A)  increase the equilibrium price 
B)  decrease the equilibrium price 
C)  increase the equilibrium quantity 
D)  decrease the equilibrium quantity 
A)  increase the equilibrium price 
B)  decrease the equilibrium price 
C)  increase the equilibrium quantity 
D)  decrease the equilibrium quantity

Question 6

Consider the demand curve Qd = 500P-2.If the price is 1,the elasticity of demand is

Accepted Answer

A)  -0.50 
B)  -2 
C)  500 
D)  -500 
A)  -0.50 
B)  -2 
C)  500 
D)  -500

Question 7

What is the quantity of televisions demanded per year when the average price of a television is $100 per unit and the demand curve for televisions is represented by Qd = 3.5million - 5000P?

Accepted Answer

A)  2.5 million televisions 
B)  3.0 million televisions 
C)  3.2 million televisions 
D)  4.0 million televisions 
A)  2.5 million televisions 
B)  3.0 million televisions 
C)  3.2 million televisions 
D)  4.0 million televisions

Question 8

The linear demand curve is represented by the equation

Accepted Answer

A)  P=Q-aP 
B)  Q=a-bP 
C)  Q=a-bP2 
D)  Q = AP-b 
A)  P=Q-aP 
B)  Q=a-bP 
C)  Q=a-bP2 
D)  Q = AP-b

Question 9

Suppose that demand and supply for cookies can be written as:
Qd = 50 - P; Qs = P.Compute the equilibrium price and quantity.Now,suppose that a change in the price of cake causes demand for cookies to become:
Qd = 100 - P.Compute the new equilibrium price and quantity.What has changed?

Accepted Answer

The equilibrium price and quantity at th

Question 10

Suppose demand is given by Qd = 500 - 15P and supply is given by Qs = 5P.If the government imposes a $15 price ceiling the excess demand will be

Accepted Answer

A)  200 
B)  225 
C)  250 
D)  275 
A)  200 
B)  225 
C)  250 
D)  275

Question 11

Which of the following statements best illustrates the law of demand?

Accepted Answer

A)  When the price of pepperoni rises, the demand for pizza falls. 
B)  When the weather gets hotter, the quantity demanded of ice cream rises. 
C)  When the price of lemons falls, the demand for lemonade rises. 
D)  When the price of eggs rises, the quantity demanded of eggs falls. 
A)  When the price of pepperoni rises, the demand for pizza falls. 
B)  When the weather gets hotter, the quantity demanded of ice cream rises. 
C)  When the price of lemons falls, the demand for lemonade rises. 
D)  When the price of eggs rises, the quantity demanded of eggs falls.

Question 12

Suppose in a market with Qd = 100 - 5P and Qs = 5P,the government imposes a price floor of $15.If the government is required to purchase any excess supply at the price floor,how much will the government have to pay to purchase the excess in this market?

Accepted Answer

A)  Nothing; there is no surplus 
B)  $1,000 
C)  $1,500 
D)  $750 
A)  Nothing; there is no surplus 
B)  $1,000 
C)  $1,500 
D)  $750

Question 13

Which of the following statements best illustrates the law of supply?

Accepted Answer

A)  When the price of oil rises, the supply of automobiles falls. 
B)  When the price of steel falls, the supply of automobiles rises. 
C)  When the price of computers rises, the quantity supplied of computers rises. 
D)  When the price of televisions rises, the quantity supplied of televisions falls. 
A)  When the price of oil rises, the supply of automobiles falls. 
B)  When the price of steel falls, the supply of automobiles rises. 
C)  When the price of computers rises, the quantity supplied of computers rises. 
D)  When the price of televisions rises, the quantity supplied of televisions falls.

Question 14

What is the difference between a derived demand curve and a direct demand curve?

Accepted Answer

A)  Derived demand is unknown, whereas direct demand is known. 
B)  Derived demand is unobservable, whereas direct demand is observable. 
C)  Derived demand is demand determined by the demand for another good, whereas direct demand is demand for a good itself. 
D)  Derived and direct demand are both terms referring to the same thing. 
A)  Derived demand is unknown, whereas direct demand is known. 
B)  Derived demand is unobservable, whereas direct demand is observable. 
C)  Derived demand is demand determined by the demand for another good, whereas direct demand is demand for a good itself. 
D)  Derived and direct demand are both terms referring to the same thing.

Question 15

Let the price elasticity of demand for a soft drink be - 2.In the year 2005,the per capita consumption of soft drinks was about 500 cans per person,and the average price was $1.00 per can.If we suppose that demand for the soft drink is linear,Qd = a - bP,where a and b are constants,Qd is quantity demanded and P is price,an estimate of the demand equation could be:

Accepted Answer

A)  Qd = 100 - 2P 
B)  Qd = 1500 - 2P 
C)  Qd = 1500 - 1000P 
D)  Qd = 1000 - 1500P 
A)  Qd = 100 - 2P 
B)  Qd = 1500 - 2P 
C)  Qd = 1500 - 1000P 
D)  Qd = 1000 - 1500P

Question 16

Suppose the cross-price elasticity for two goods is positive.The two goods are

Accepted Answer

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

Question 17

Of the following choices,which good should have the most inelastic price elasticity of demand?

Accepted Answer

A)  Gasoline to a car owner. 
B)  Cigarettes to a smoker. 
C)  Insulin to an insulin-dependent diabetic. 
D)  Apples to a vegetarian. 
A)  Gasoline to a car owner. 
B)  Cigarettes to a smoker. 
C)  Insulin to an insulin-dependent diabetic. 
D)  Apples to a vegetarian.

Question 18

Suppose that demand is linear,Qd = 100 - 12P.At P = 5 and Q = 40,price elasticity of demand is:

Accepted Answer

A)  -2/3 
B)  -2 
C)  -12 
D)  -3/2 
A)  -2/3 
B)  -2 
C)  -12 
D)  -3/2

Question 19

Consider the demand curve Qd = 1000 - 20P - 6r.If the value of r falls,the demand curve will

Accepted Answer

A)  shift to the left 
B)  shift to the right 
C)  remain unchanged 
D)  rotate along the quantity axis 
A)  shift to the left 
B)  shift to the right 
C)  remain unchanged 
D)  rotate along the quantity axis

Question 20

Which of the following would cause an unambiguous decrease in the equilibrium quantity in a market?

Accepted Answer

A)  a rightward shift in supply and a rightward shift in demand. 
B)  a rightward shift in supply and a leftward shift in demand. 
C)  a leftward shift in supply and a rightward shift in demand. 
D)  a leftward shift in supply and a leftward shift in demand. 
A)  a rightward shift in supply and a rightward shift in demand. 
B)  a rightward shift in supply and a leftward shift in demand. 
C)  a leftward shift in supply and a rightward shift in demand. 
D)  a leftward shift in supply and a leftward shift in demand.

If demand is elastic,an increase in price

Which of the following is not typically a factor held constant when deriving a demand curve for clothing?

The law of demand states :

Consider the supply curve Q^s= 40 + 2P + 6i.If the value of i rises,the supply curve will

A simultaneous shift to the right of both supply and demand will

Consider the demand curve Q^d = 500P^-2.If the price is 1,the elasticity of demand is

What is the quantity of televisions demanded per year when the average price of a television is $100 per unit and the demand curve for televisions is represented by Q^d = 3.5million - 5000P?

The linear demand curve is represented by the equation

Suppose that demand and supply for cookies can be written as: Q^d = 50 - P; Q^s = P.Compute the equilibrium price and quantity.Now,suppose that a change in the price of cake causes demand for cookies to become: Q^d = 100 - P.Compute the new equilibrium price and quantity.What has changed?

Suppose demand is given by Q^d = 500 - 15P and supply is given by Q^s = 5P.If the government imposes a $15 price ceiling the excess demand will be

Which of the following statements best illustrates the law of demand?

Suppose in a market with Q^d = 100 - 5P and Q^s = 5P,the government imposes a price floor of $15.If the government is required to purchase any excess supply at the price floor,how much will the government have to pay to purchase the excess in this market?

Which of the following statements best illustrates the law of supply?

What is the difference between a derived demand curve and a direct demand curve?

Suppose the cross-price elasticity for two goods is positive.The two goods are

Of the following choices,which good should have the most inelastic price elasticity of demand?

Suppose that demand is linear,Q^d = 100 - 12P.At P = 5 and Q = 40,price elasticity of demand is:

Consider the demand curve Q^d = 1000 - 20P - 6r.If the value of r falls,the demand curve will

Which of the following would cause an unambiguous decrease in the equilibrium quantity in a market?

Analyzing Economic Problems

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Exam 2: Demand and Supply Analysis

If demand is elastic,an increase in price

Which of the following is not typically a factor held constant when deriving a demand curve for clothing?

The law of demand states :

Consider the supply curve Qs = 40 + 2P + 6i.If the value of i rises,the supply curve will

A simultaneous shift to the right of both supply and demand will

Consider the demand curve Qd = 500P-2.If the price is 1,the elasticity of demand is

What is the quantity of televisions demanded per year when the average price of a television is $100 per unit and the demand curve for televisions is represented by Qd = 3.5million - 5000P?

The linear demand curve is represented by the equation

Suppose that demand and supply for cookies can be written as: Qd = 50 - P; Qs = P.Compute the equilibrium price and quantity.Now,suppose that a change in the price of cake causes demand for cookies to become: Qd = 100 - P.Compute the new equilibrium price and quantity.What has changed?

Suppose demand is given by Qd = 500 - 15P and supply is given by Qs = 5P.If the government imposes a $15 price ceiling the excess demand will be

Which of the following statements best illustrates the law of demand?

Suppose in a market with Qd = 100 - 5P and Qs = 5P,the government imposes a price floor of $15.If the government is required to purchase any excess supply at the price floor,how much will the government have to pay to purchase the excess in this market?

Which of the following statements best illustrates the law of supply?

What is the difference between a derived demand curve and a direct demand curve?

Suppose the cross-price elasticity for two goods is positive.The two goods are

Of the following choices,which good should have the most inelastic price elasticity of demand?

Suppose that demand is linear,Qd = 100 - 12P.At P = 5 and Q = 40,price elasticity of demand is:

Consider the demand curve Qd = 1000 - 20P - 6r.If the value of r falls,the demand curve will

Which of the following would cause an unambiguous decrease in the equilibrium quantity in a market?

Analyzing Economic Problems

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Consider the supply curve Q^s= 40 + 2P + 6i.If the value of i rises,the supply curve will

Consider the demand curve Q^d = 500P^-2.If the price is 1,the elasticity of demand is

What is the quantity of televisions demanded per year when the average price of a television is $100 per unit and the demand curve for televisions is represented by Q^d = 3.5million - 5000P?

Suppose that demand and supply for cookies can be written as: Q^d = 50 - P; Q^s = P.Compute the equilibrium price and quantity.Now,suppose that a change in the price of cake causes demand for cookies to become: Q^d = 100 - P.Compute the new equilibrium price and quantity.What has changed?

Suppose demand is given by Q^d = 500 - 15P and supply is given by Q^s = 5P.If the government imposes a $15 price ceiling the excess demand will be

Suppose in a market with Q^d = 100 - 5P and Q^s = 5P,the government imposes a price floor of $15.If the government is required to purchase any excess supply at the price floor,how much will the government have to pay to purchase the excess in this market?

Suppose that demand is linear,Q^d = 100 - 12P.At P = 5 and Q = 40,price elasticity of demand is:

Consider the demand curve Q^d = 1000 - 20P - 6r.If the value of r falls,the demand curve will