Question 1

Consumer surplus is

Accepted Answer

A)  the value consumers get from a supplier. 
B)  the value consumers do not pay because of a discount by supplier. 
C)  the value consumers get from a good but do not pay for. 
D)  equal to the amount consumers pay for a good. 
A)  the value consumers get from a supplier. 
B)  the value consumers do not pay because of a discount by supplier. 
C)  the value consumers get from a good but do not pay for. 
D)  equal to the amount consumers pay for a good. C

Question 2

Consider a market characterized by the following demand and supply conditions: PX = 15 - 2QX and PX = 3 + 2QX. The equilibrium price and quantity are, respectively,

Accepted Answer

A)  $3 and 9 units. 
B)  $9 and 3 units. 
C)  $12 and 4 units. 
D)  $4 and 12 units. 
A)  $3 and 9 units. 
B)  $9 and 3 units. 
C)  $12 and 4 units. 
D)  $4 and 12 units. B

Question 3

The maximum legal price that can be charged in a market is:

Accepted Answer

A)  a price floor. 
B)  an ad valorem tax. 
C)  the market equilibrium price. 
D)  a price ceiling. 
A)  a price floor. 
B)  an ad valorem tax. 
C)  the market equilibrium price. 
D)  a price ceiling. D

Question 4

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

Accepted Answer

A)  holding only input price fixed. 
B)  allowing input price to vary. 
C)  holding all supply shifters fixed. 
D)  allowing all supply shifters to vary. 
A)  holding only input price fixed. 
B)  allowing input price to vary. 
C)  holding all supply shifters fixed. 
D)  allowing all supply shifters to vary.

Question 5

An ad valorem tax shifts the supply curve

Accepted Answer

A)  down by the amount of the tax. 
B)  up by the amount of the tax. 
C)  by rotating it counter-clockwise. 
D)  by rotating it clockwise. 
A)  down by the amount of the tax. 
B)  up by the amount of the tax. 
C)  by rotating it counter-clockwise. 
D)  by rotating it clockwise.

Question 6

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

Accepted Answer

A)  PX = 500 - 2QX - 3PY + 0.01M. 
B)  PX = 335 - 0.5QX. 
C)  PX = 335 - 2QX. 
D)  PX = 500 - 2QX. 
A)  PX = 500 - 2QX - 3PY + 0.01M. 
B)  PX = 335 - 0.5QX. 
C)  PX = 335 - 2QX. 
D)  PX = 500 - 2QX.

Question 7

The buyer side of the market is known as the:

Accepted Answer

A)  income side. 
B)  demand side. 
C)  supply side. 
D)  seller side. 
A)  income side. 
B)  demand side. 
C)  supply side. 
D)  seller side.

Question 8

Which of the following is probably not a normal good?

Accepted Answer

A)  Designer jeans. 
B)  Diamond rings. 
C)  Intercity passenger bus travel. 
D)  New automobiles. 
A)  Designer jeans. 
B)  Diamond rings. 
C)  Intercity passenger bus travel. 
D)  New automobiles.

Question 9

Suppose both supply and demand decrease. What effect will this have on price?

Accepted Answer

A)  It will fall. 
B)  It will rise. 
C)  It may rise or fall. 
D)  It will remain the same. 
A)  It will fall. 
B)  It will rise. 
C)  It may rise or fall. 
D)  It will remain the same.

Question 10

Under a price ceiling, the full economic price is

Accepted Answer

A)  the dollar price paid to the firm. 
B)  the opportunity cost of not being able to buy a good when a consumer needs it. 
C)  lower than the free-market price. 
D)  higher than the free-market price. 
A)  the dollar price paid to the firm. 
B)  the opportunity cost of not being able to buy a good when a consumer needs it. 
C)  lower than the free-market price. 
D)  higher than the free-market price.

Question 11

Other things held constant, the lower the price of a good

Accepted Answer

A)  the lower the demand. 
B)  the higher the demand. 
C)  the greater the consumer surplus. 
D)  the lower the consumer surplus. 
A)  the lower the demand. 
B)  the higher the demand. 
C)  the greater the consumer surplus. 
D)  the lower the consumer surplus.

Question 12

Russian state television has imposed a temporary ban on all TV commercials. Your firm specializes in exports to Russia. 90 percent of its sales consist of consumer goods shipped to Russia. Your supervisor wants to know the likely impact of the ban on your firm's operations. What do you tell her?

Accepted Answer

A ban on advertising will like

Question 13

Which of the following pairs of goods are probably complements?

Accepted Answer

A)  Electricity and natural gas. 
B)  Butter and margarine. 
C)  Steak and chicken. 
D)  Ketchup and French fries. 
A)  Electricity and natural gas. 
B)  Butter and margarine. 
C)  Steak and chicken. 
D)  Ketchup and French fries.

Question 14

All else held constant, as additional firms enter an industry

Accepted Answer

A)  more output is available at each given price. 
B)  less output is available at each given price. 
C)  the same output is available at each given price. 
D)  output could increase or decrease at each given price. 
A)  more output is available at each given price. 
B)  less output is available at each given price. 
C)  the same output is available at each given price. 
D)  output could increase or decrease at each given price.

Question 15

An inferior good is a good

Accepted Answer

A)  that has low quality. 
B)  that consumers purchase less of when their incomes are higher. 
C)  that consumers purchase more when their incomes are higher. 
D)  of high quality. 
A)  that has low quality. 
B)  that consumers purchase less of when their incomes are higher. 
C)  that consumers purchase more when their incomes are higher. 
D)  of high quality.

Question 16

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:

Accepted Answer

A)  $15. 
B)  $19. 
C)  $17. 
D)  $20. 
A)  $15. 
B)  $19. 
C)  $17. 
D)  $20.

Question 17

Changes in the price of a good lead to:

Accepted Answer

A)  changes in the quantity supplied of the good. 
B)  changes in supply. 
C)  changes in demand. 
D)  no effects in quantity supplied or demanded. 
A)  changes in the quantity supplied of the good. 
B)  changes in supply. 
C)  changes in demand. 
D)  no effects in quantity supplied or demanded.

Question 18

You are the manager of Fast & Easy Donuts. Almost all of your donut sales are derived from the drive-through window. You know from experience that coffee is a complement for your donuts. The morning newspaper says that a major storm has just destroyed 50 percent of this year's coffee bean crop. Will this affect how much flour you order? Will it affect how many employees you schedule? What will happen to prices?

Accepted Answer

Destruction of 50% of this year's coffee

Question 19

If a shortage exists in a market, the natural tendency is for:

Accepted Answer

A)  demand to increase. 
B)  price to increase. 
C)  quantity supplied to decrease. 
D)  no change in the market. 
A)  demand to increase. 
B)  price to increase. 
C)  quantity supplied to decrease. 
D)  no change in the market.

Question 20

Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

Accepted Answer

A)  decrease by $20,000. 
B)  decrease by $100,000. 
C)  increase by $100,000. 
D)  increase by $20,000. 
A)  decrease by $20,000. 
B)  decrease by $100,000. 
C)  increase by $100,000. 
D)  increase by $20,000.

Consumer surplus is

Consider a market characterized by the following demand and supply conditions: P_X = 15 - 2Q_X and P_X = 3 + 2Q_X. The equilibrium price and quantity are, respectively,

The maximum legal price that can be charged in a market is:

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

An ad valorem tax shifts the supply curve

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

The buyer side of the market is known as the:

Which of the following is probably not a normal good?

Suppose both supply and demand decrease. What effect will this have on price?

Under a price ceiling, the full economic price is

Other things held constant, the lower the price of a good

Russian state television has imposed a temporary ban on all TV commercials. Your firm specializes in exports to Russia. 90 percent of its sales consist of consumer goods shipped to Russia. Your supervisor wants to know the likely impact of the ban on your firm's operations. What do you tell her?

Which of the following pairs of goods are probably complements?

All else held constant, as additional firms enter an industry

An inferior good is a good

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P. The equilibrium price is:

Changes in the price of a good lead to:

If a shortage exists in a market, the natural tendency is for:

Suppose the demand for X is given by Q_x^d = 100 - 2P_X + 4P_Y + 10M + 2A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

The Fundamentals of Managerial Economics

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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Exam 2: Market Forces: Demand and Supply

Consumer surplus is

Consider a market characterized by the following demand and supply conditions: PX = 15 - 2QX and PX = 3 + 2QX. The equilibrium price and quantity are, respectively,

The maximum legal price that can be charged in a market is:

The market supply curve indicates the total quantity all producers in a competitive market would produce at each price,

An ad valorem tax shifts the supply curve

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

The buyer side of the market is known as the:

Which of the following is probably not a normal good?

Suppose both supply and demand decrease. What effect will this have on price?

Under a price ceiling, the full economic price is

Other things held constant, the lower the price of a good

Russian state television has imposed a temporary ban on all TV commercials. Your firm specializes in exports to Russia. 90 percent of its sales consist of consumer goods shipped to Russia. Your supervisor wants to know the likely impact of the ban on your firm's operations. What do you tell her?

Which of the following pairs of goods are probably complements?

All else held constant, as additional firms enter an industry

An inferior good is a good

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:

Changes in the price of a good lead to:

If a shortage exists in a market, the natural tendency is for:

Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will

The Fundamentals of Managerial Economics

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Consider a market characterized by the following demand and supply conditions: P_X = 15 - 2Q_X and P_X = 3 + 2Q_X. The equilibrium price and quantity are, respectively,

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P. The equilibrium price is:

Suppose the demand for X is given by Q_x^d = 100 - 2P_X + 4P_Y + 10M + 2A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will