Question 1

Supply curves tend to be _____ in the ______.

Accepted Answer

A)   steeper; long run
B)   flatter; long run
C)   flatter; short run
D)   negatively-sloped; short run and in the long runE) C) and D)
F) None of the above

Question 2

Without more information,the supply and demand model cannot predict the effect on price of:

Accepted Answer

A)   a simultaneous decrease in quantity demanded and increase in quantity supplied.
B)   a simultaneous decrease in demand and increase in supply.
C)   a simultaneous increase in demand and increase in supply.
D)   a simultaneous increase in demand and decrease in supply.E) None of the above
F) All of the above

Question 3

If an increase in the price of one good causes buyers to demand less of another good,then the two goods are:

Accepted Answer

A)   normal goods.
B)   inferior goods.
C)   substitutes.
D)   complements.E) None of the above
F) A) and B)

Question 4

Refer to Table 2.2,which presents hypothetical data on cross-price elasticity of demand estimates.Which goods are the best substitutes?

Accepted Answer

A)   Coke and Pepsi
B)   Hard Liquor and Beer
C)   Beef and Chicken
D)   Cheese and ButterE) B) and C)
F) A) and B)

Question 5

Demand is said to be perfectly inelastic when:

Accepted Answer

A)   the demand curve is horizontal.
B)   the elasticity of demand is infinite.
C)   the elasticity of demand is zero.
D)   consumers are highly responsive to change in the price of a good.E) A) and B)
F) A) and C)

Question 6

Suppose bad weather destroys a significant portion of the nations' corn crop.Will total expenditures on corn increase or decrease? Illustrate your answer with a graph.

Accepted Answer

When bad weather destroys a significant ...

Question 7

Suppose that an increase in oil prices causes the supply curve of gasoline to shift.Using a graph,illustrate the resulting changes in equilibrium price and quantity in both the short run and the long run.

Accepted Answer

The impact of a decrease in the supply o...

Question 8

If an increase in the price of one good causes buyers to demand more of another good,then the two goods are:

Accepted Answer

A)   normal goods.
B)   inferior goods.
C)   substitutes.
D)   complements.E) A) and B)
F) A) and C)

Question 9

Suppose there is a decrease in both the demand for and supply of a good.What happens to equilibrium price and quantity?

Accepted Answer

A)   Equilibrium quantity increases, but the effect on equilibrium price is ambiguous.
B)   Equilibrium quantity decreases, but the effect on equilibrium price is ambiguous.
C)   Equilibrium price increases, but the effect on equilibrium quantity is ambiguous.
D)   Equilibrium price decreases, but the effect on equilibrium quantity is ambiguous.E) All of the above
F) A) and B)

Question 10

Consider the relationship given by QCars = 100 + 4 × PCars - 2 × PSteel - 0.2 × PWorkers,where QCars is the quantity of cars supplied (in thousands) ,PCars is the price of cars (in thousands of dollars) ,PSteel is the price of steel,and PWorkers is the wage earned by autoworkers.If the price of steel is $10 per unit and the price of workers (the wage) is $20,what is the supply curve for cars?

Accepted Answer

A)   QCars = 124 + 4 × PCars
B)   QCars = 100 + 4 × PCars - 2 × PSteel - .2 × PWorkers
C)   QCars = 100 + 4 × PCars
D)   QCars = 76 + 4 × PCarE) C) and D)
F) A) and D)

Question 11

A product's ________ describes the amount of the product that is demanded for each possible combination of its price and other factors.

Accepted Answer

A)   demand curve
B)   price-consumption curve
C)   utility function
D)   demand functionE) None of the above
F) B) and C)

Question 12

Isoelastic demand means that:

Accepted Answer

A)   the elasticity of demand is equal to -1.
B)   demand is completely unresponsive to price.
C)   the elasticity is demand is infinite.
D)   the demand function has the same elasticity at every price.E) A) and B)
F) A) and C)

Question 13

Excess supply is:

Accepted Answer

A)   the result of a price that is above equilibrium, causing the quantity demanded to exceed the quantity supplied.
B)   the result of a price that is below equilibrium, causing the quantity demanded to exceed the quantity supplied.
C)   the result of a price that is above equilibrium, causing the quantity supplied to exceed the quantity demanded.
D)   the result of a price that is below equilibrium, causing the quantity supplied to exceed the quantity demanded.E) A) and D)
F) B) and C)

Question 14

A change in the quantity supplied of a good is represented as a:

Accepted Answer

A)   movement along a supply curve.
B)   shift of a supply curve.
C)   movement along the supply function.
D)   shift of the supply function.E) A) and D)
F) B) and C)

Question 15

Consider the relationship given by QCars = 100 + 4 × PCars - 2 × PSteel - 0.2 × PWorkers,where QCars is the quantity of cars supplied (in thousands) ,PCars is the price of cars (in thousands of dollars) ,PSteel is the price of steel,and PWorkers is the wage earned by autoworkers.What would be the impact of a $15 increase in the price of steel?

Accepted Answer

A)   The quantity of cars supplied would decrease by 30,000 cars.
B)   The quantity of cars supplied would increase by 30,000 cars.
C)   The quantity of cars supplied would decrease by 7,500 cars.
D)   The quantity of cars supplied would increase by 7,500 cars.E) All of the above
F) A) and B)

Question 16

Refer to Figure 2.3.At a price of $13 per CD,there would be:

Accepted Answer

A)   excess supply of 30 thousand CDs.
B)   excess demand of 10 thousand CDs.
C)   excess supply of 60 thousand CDs.
D)   excess demand of 60 thousand CDs.E) B) and C)
F) C) and D)

Question 17

Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25 × PCTV + 0.0005 × M + 0.3 × PSTV,where QCTV is the quantity of cable TV demanded (thousands of households) ,PCTV is the price of cable TV,M is income and PSTV is the price of satellite TV service.If consumers' income is $50,000 and the price of satellite TV service is $90,then which of the following gives the demand curve for cable TV?

Accepted Answer

A)   QCTV = 17 - 0.25 × PCTV
B)   QCTV = 67 - 0.25 × PCTV
C)   QCTV = 15 - 0.25 × PCTV + 0.0005 × M + 0.3 × PSTV
D)   QCTV = 13 - 0.25 × PCTVE) All of the above
F) None of the above

Question 18

Demand is said to be elastic when:

Accepted Answer

A)   the percentage change in the amount demanded is smaller than the percentage change in price.
B)   the demand curve is relatively flat.
C)   the elasticity of demand is less than -1.
D)   the elasticity of demand is greater than -1.E) A) and C)
F) C) and D)

Question 19

An increase in the price of a good is shown by a:

Accepted Answer

A)   rightward shift of the demand curve.
B)   leftward shift of the demand curve.
C)   movement up and to the left along the demand curve.
D)   movement down and to the right along the demand curve.E) A) and C)
F) All of the above

Question 20

Complements are characterized by:

Accepted Answer

A)   negative cross-price elasticity of demand.
B)   positive cross-price elasticity of demand.
C)   cross-price elasticity of demand equal to zero.
D)   cross price elasticity of demand equal to -1.E) A) and B)
F) B) and C)

Exam 2: Supply and Demand

Correct Answer
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Supply curves tend to be _ in the __.

Correct Answer
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Refer to Table 2.2,which presents hypothetical data on cross-price elasticity of demand estimates.Which goods are the best substitutes?

Correct Answer
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Correct Answer
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Demand is said to be perfectly inelastic when:

Correct Answer
verified

Complements are characterized by:

Correct Answer
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Correct Answer
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Suppose that an increase in oil prices causes the supply curve of gasoline to shift.Using a graph,illustrate the resulting changes in equilibrium price and quantity in both the short run and the long run.

Correct Answer
verified
The impact of a decrease in the supply o...
View Answer

Without more information,the supply and demand model cannot predict the effect on price of:

Correct Answer
verified

Demand is said to be elastic when:

Correct Answer
verified

Suppose bad weather destroys a significant portion of the nations' corn crop.Will total expenditures on corn increase or decrease? Illustrate your answer with a graph.

Correct Answer
verified
When bad weather destroys a significant ...
View Answer

Refer to Figure 2.3.At a price of $13 per CD,there would be:

Correct Answer
verified

Suppose there is a decrease in both the demand for and supply of a good.What happens to equilibrium price and quantity?

Correct Answer
verified

Excess supply is:

Correct Answer
verified

An increase in the price of a good is shown by a:

Correct Answer
verified

Isoelastic demand means that:

Correct Answer
verified

If an increase in the price of one good causes buyers to demand more of another good,then the two goods are:

Correct Answer
verified

If an increase in the price of one good causes buyers to demand less of another good,then the two goods are:

Correct Answer
verified

A product's ________ describes the amount of the product that is demanded for each possible combination of its price and other factors.

Correct Answer
verified

A change in the quantity supplied of a good is represented as a:

Correct Answer
verified

Exam 2: Supply and Demand

Correct AnswerverifiedShow Answer

Supply curves tend to be _____ in the ______.

Correct AnswerverifiedShow Answer

Refer to Table 2.2,which presents hypothetical data on cross-price elasticity of demand estimates.Which goods are the best substitutes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Demand is said to be perfectly inelastic when:

Correct AnswerverifiedShow Answer

Complements are characterized by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that an increase in oil prices causes the supply curve of gasoline to shift.Using a graph,illustrate the resulting changes in equilibrium price and quantity in both the short run and the long run.

Correct AnswerverifiedThe impact of a decrease in the supply o...View AnswerShow Answer

Without more information,the supply and demand model cannot predict the effect on price of:

Correct AnswerverifiedShow Answer

Demand is said to be elastic when:

Correct AnswerverifiedShow Answer

Suppose bad weather destroys a significant portion of the nations' corn crop.Will total expenditures on corn increase or decrease? Illustrate your answer with a graph.

Correct AnswerverifiedWhen bad weather destroys a significant ...View AnswerShow Answer

Refer to Figure 2.3.At a price of $13 per CD,there would be:

Correct AnswerverifiedShow Answer

Suppose there is a decrease in both the demand for and supply of a good.What happens to equilibrium price and quantity?

Correct AnswerverifiedShow Answer

Excess supply is:

Correct AnswerverifiedShow Answer

An increase in the price of a good is shown by a:

Correct AnswerverifiedShow Answer

Isoelastic demand means that:

Correct AnswerverifiedShow Answer

If an increase in the price of one good causes buyers to demand more of another good,then the two goods are:

Correct AnswerverifiedShow Answer

If an increase in the price of one good causes buyers to demand less of another good,then the two goods are:

Correct AnswerverifiedShow Answer

A product's ________ describes the amount of the product that is demanded for each possible combination of its price and other factors.

Correct AnswerverifiedShow Answer

A change in the quantity supplied of a good is represented as a:

Correct AnswerverifiedShow Answer

Correct Answer
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Supply curves tend to be _ in the __.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The impact of a decrease in the supply o...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
When bad weather destroys a significant ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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