Exam 2: Supply and Demand

"If,at the initial price,there is excess demand,the price will rise.As a consequence,the demand curve shifts down since people buy less at a higher price,and the supply curve shifts up because producers find it profitable to supply more output at a higher price.Price will continue to adjust until there is no excess demand." Which of the following is true about this statement?

Corn farmers in a country are colluding to reduce the market supply of corn.This will successfully raise the farmers' incomes only if the demand for corn is:

An increase in quantity supplied:

Which one of the following goods is likely to have the highest income elasticity of demand?

An excess demand for a good or service tends to cause:

When there is an excess demand for a good,there is:

The demand and supply functions of a firm are given as follows: Q_d = 10 - 3P Q_s = 2 + P a)Determine the equilibrium price and quantity. b)Derive the price elasticity of demand assuming that the price level falls 10% below the equilibrium price.

Consider the demand curve Q = 50 - 3P,for P=10 elasticity is:

The state of Florida enacted anti-gouging legislation that imposes criminal penalties on individuals or firms that charge more for their goods or services after a disaster,like a hurricane or tornado,than they charged just prior to the disaster.Each of the following represents the social loss of this legislation,except:

When the market for a good,such as gasoline,is competitive and its price suddenly increases substantially,we can infer:

Which of the following would result in a higher equilibrium price and an ambiguous change in the equilibrium quantity?

Let the market demand for rye bread be given by Q = 500 + I - 250P_rye + 400P_wheat,where Q is monthly demand in number of loaves,I is average monthly income in dollars,P_rye is the price of a loaf of rye bread,and P_wheat is the price of a loaf of wheat bread.If I = $1,000,P_rye = $2,and P_wheat = $3,calculate the following (based on 10% changes in denominators): a)the arc price elasticity of demand for rye bread b)the arc price elasticity of demand for wheat bread c)the arc cross-price elasticity of demand for rye bread d)the arc income elasticity of demand for rye bread

Which of the following violates the law of demand?

If a higher price results in no change in total expenditure,then demand is:

Which of the following is likely to occur if the demand for housing increases?

If land use restrictions in major cities were relaxed,the:

The demand curve for soda is represented by the following equation: Q=12-2P.If at the current market price the elasticity of demand for soda is -2,what is the market price?

What will be the shape of the supply curve and the elasticity of supply of a good,if the average cost of production increases with an increase in output? If after a point in time,the per-unit cost of production becomes constant how will the shape of the supply curve and the elasticity change?

Which of the following is true of a legislated price ceiling?

The negative slope of the demand curve indicates that: