Question 1

Unionized workers may be able to negotiate with management for higher wages during periods of economic prosperity. Suppose that workers at automobile assembly plants successfully negotiate a significant increase in their wage package. How would the new wage contract be likely to affect the market supply of new cars?

Accepted Answer

A)   Supply will shift to the right.
B)   Supply will shift to the left.
C)   Supply will not shift, but the quantity of cars produced per month will decrease.
D)   Supply will not shift, but the quantity of cars produced per month will increase. B

Question 2

A minimum wage set below the market equilibrium wage will result in higher unemployment.

Accepted Answer

A) True 
 B)False  False

Question 3

Excess supply causes the price to

Accepted Answer

A)   increase.
B)   fall.
C)   remain unchanged. B

Question 4

What would your answer to the previous question be if the current market-clearing wage equaled $7.00?

Accepted Answer

A)   The unemployment would increase.
B)   The unemployment would remain the same.
C)   The unemployment would decrease.
D)   None of the above is correct.

Question 5

The cost of protection of domestic jobs from foreign competition is usually paid by domestic consumers in the form of higher prices on imported goods.

Accepted Answer

A) True 
 B)False

Question 6

If both demand and supply decrease at the same time, then

Accepted Answer

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

Question 7

A good is normal if a rise in consumers' income causes

Accepted Answer

A)   the quantity demanded to increase.
B)   the demand to decrease.
C)   the demand to increase.
D)   None of the above is correct.

Question 8

If there is a shortage in a rental market, what is expected?

Accepted Answer

A)   Rental prices to be decreasing until shortage is eliminated.
B)   Rental prices to be increasing until shortage is eliminated.
C)   Rental prices to either be increasing or decreasing.
D)   Rental prices to stay the same.

Question 9

Import tariffs on a good or a service do all of the following, except

Accepted Answer

A)   increase the equilibrium price in the domestic market.
B)   increase the equilibrium quantity sold in the domestic market.
C)   helps the domestic producers.
D)   raises government revenue.

Question 10

A decline in the supply will cause a change in

Accepted Answer

A)   the level of quantity demanded.
B)   the demand.
C)   A and B
D)   None of the above is correct.

Question 11

If automobile manufacturers are producing cars faster than people want to buy them,

Accepted Answer

A)   there is an excess supply and price can be expected to decrease.
B)   there is an excess supply and price can be expected to increase.
C)   there is an excess demand and price can be expected to decrease.
D)   there is an excess demand and price can be expected to increase.

Question 12

At a price of $299.99, the manufacturer of a portable air conditioner is willing to produce 19,000 units per quarter. At a price of $349.99, it is likely that the manufacturer will be willing to produce

Accepted Answer

A)   more than 19,000 units per quarter.
B)   19,000 units per quarter.
C)   fewer than 19,000 units per quarter.
D)   It is impossible to predict the effect of a higher price on the number of units of a product that a firm will be willing to produce.

Question 13

Assume that the demand is estimated to be: $$Q _ { D } = 50 + 0.1 \text { Income } - P$$ (i)Is this demand equation consistent with the law of demand? (ii)Is this a demand for a normal or inferior good? (iii)Construct the demand schedule for this demand, evaluated at two different income levels (I = 100, and I = 200), using the table below: $$\begin{array} { | c | c | c | } \hline \text { Price } & \begin{array} { c } \text { Quantity Demanded } \ \text { Income } = 100 \end{array} & \begin{array} { c } \text { Quantity Demanded } \ \text { Income } = 200 \end{array} \ \hline & & \ 10 & & \ 20 & & \ 30 & & \ 40 & & \ 50 & & \ \hline \end{array}$$

Accepted Answer

The answer of Assume that the demand is estimated to...

Question 14

In which scenario will both the equilibrium price and quantity increase at the same time?

Accepted Answer

A)   When supply increases
B)   When both supply and demand increase
C)   When demand increases
D)   When both supply and demand decrease
E)   None of the above is correct.

Question 15

Excess demand causes the price to

Accepted Answer

A)   increase.
B)   fall.
C)   remain unchanged.

Question 16

Assume that the demand and the supply in a market are represented by the following equations: $$Q _ { D } = 100 - 3 P$$ $$Q _ { s } = 2 P - 10$$ (i)Compute the market equilibrium in this case. (ii)If the government were to introduce an excise tax of $1 per unit of output, what would the new equilibrium be? What would the economic incidence of this tax be?

Accepted Answer

The answer of Assume that the demand and the supply...

Question 17

Assume that the demand for a specific tablet computer (X) is represented by the following equation:
 $$Q d _ { X } = 2000 - 20 P _ { X } + 10 P _ { Y } - 20 P _ { Z }$$ Which of the products Y and Z is a substitute to tablet computer? Which of the products is a complement?

Accepted Answer

The answer of Assume that the demand for a specific...

Question 18

Which of the following is not a characteristic of a nonclearing market?

Accepted Answer

A)   Economic agents react to price signals only
B)   Economic agents react to price and quantity signals
C)   A disequilibrium in one market can create spillover effects in a related market
D)   A presence of excess demand or excess supply

Question 19

Assume that the demand is represented by the following equation: $$Q _ { D } = 100 + 0.01 \text { Income- } 3 P$$ Also assume that the supply is represented by the following equation: $$Q _ { s } = P - I O$$ (i)Assume that the consumer income is $3,000. Please compute the market equilibrium price and quantity. (ii)Now, assume that the economy goes into a recession and the consumer's income declines to $2,000. What will the new equilibrium values be now?

Accepted Answer

The answer of Assume that the demand is represented by...

Question 20

In a perfectly competitive market no individual producer or consumer can change the market price.

Accepted Answer