Question 1

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM.From the law of demand we know that ax will be:

Accepted Answer

A)   less than zero.
B)   greater than zero.
C)   zero.
D)   None of the statements associated with this question are correct.E) A) and D)
F) A) and C)

Question 2

For a steel factory,a decrease in the cost of electricity to the plant will cause the supply curve to:

Accepted Answer

A)   become flatter.
B)   shift to the left.
C)   shift to the right.
D)   become parallel to the price axis.E) All of the above
F) A) and D)

Question 3

An excise 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 counterclockwise.
D)   by rotating it clockwise.E) All of the above
F) None of the above

Question 4

If an excise tax is imposed on a good,then the supply curve:

Accepted Answer

A)   shifts up by the amount of the demand elasticity.
B)   does not change.
C)   shifts down by the amount of the tax.
D)   shifts up by the amount of the tax.E) B) and C)
F) A) and C)

Question 5

When the government imposes a price floor above the market price,the result will be that

Accepted Answer

A)   surpluses occur.
B)   shortages become a problem.
C)   supply and demand will shift up to the new equilibrium.
D)   a price floor set above the equilibrium price will have no effect on the market equilibrium.E) A) and D)
F) A) and C)

Question 6

Suppose that supply increases and demand decreases.What effect will this have on price and quantity?

Accepted Answer

A)   Price will increase and quantity may rise or fall.
B)   Price will decrease and quantity will increase.
C)   Price will decrease and quantity will decrease.
D)   None of the statements associated with this question are correct.E) C) and D)
F) A) and B)

Question 7

An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline would shift the supply curve:

Accepted Answer

A)   down by $1.00.
B)   down by more than $1.00.
C)   up by $1.00.
D)   up by less than $1.00.E) B) and C)
F) C) and D)

Question 8

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 a supplier.
C)   the value consumers get from a good but do not pay for.
D)   equal to the amount consumers pay for a good.E) A) and D)
F) A) and B)

Question 9

Given a linear supply function of the form QXS = −10 + 5PX,find the inverse linear supply function.

Accepted Answer

A)   PX = 2 + 0.2QX
B)   PX = −10 + 0.2QX
C)   PX = −10 + 5QX
D)   PX = 2 + 5QXE) A) and D)
F) A) and C) A

Question 10

Demand shifters do NOT include the:

Accepted Answer

A)   price of the good.
B)   consumer's tastes and preferences.
C)   price of the other related goods.
D)   consumer's expectations about future prices of the good.E) None of the above
F) A) and C)

Question 11

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 percent of this year's...

Question 12

Given a linear demand function of the form QXd = 100 − 0.5PX,find the inverse linear demand function.

Accepted Answer

A)   PX = 200 − 2QX
B)   PX = 100 − 0.5QX
C)   PX = 100 − 2QX
D)   PX = 100QX − 0.5PXE) B) and D)
F) A) and C)

Question 13

An ad valorem tax causes the supply curve to:

Accepted Answer

A)   shift to the right.
B)   become flatter.
C)   become steeper.
D)   shift to the left.E) A) and B)
F) None of the above

Question 14

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.Based on this information,we know that good Y is

Accepted Answer

A)   a substitute for good X.
B)   a complement for good X.
C)   an inferior good.
D)   a normal good.E) B) and D)
F) B) and C)

Question 15

A change in income will NOT lead to:

Accepted Answer

A)   a movement along the demand curve.
B)   a leftward shift of the demand curve.
C)   a rightward shift of the demand curve.
D)   All of the statements associated with the question are correct.E) A) and B)
F) All of the above A

Question 16

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 automobilesE) All of the above
F) None of the above

Question 17

Suppose market demand and supply are given by Qd = 100 − 2P and Qs = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

Accepted Answer

A)   0
B)   45
C)   30
D)   55E) A) and C)
F) All of the above D

Question 18

Suppose X and Y are complements and demand for X is Qxd = 0 + XPX + YPY + MM + HH.Then we know:

Accepted Answer

A)   H > 0.
B)   X > 0.
C)   Y 
D)   M < 0.E) B) and D)
F) A) and B)

Question 19

Good X is a normal good if an increase in income leads to:

Accepted Answer

A)   an increase in the supply for good X.
B)   an increase in the demand for good X.
C)   a decrease in the demand for good X.
D)   a decrease in the supply for good X.E) A) and B)
F) None of the above

Question 20

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.Compute the surplus received by consumers and producers.

Accepted Answer

A)   $24 and $24, respectively
B)   $4 and $4, respectively
C)   $2 and $6, respectively
D)   $6 and $2, respectivelyE) All of the above
F) C) and D)

Exam 2: Market Forces: Demand and Supply

Suppose the demand for good X is given by Q^d_x = 10 + a_xP_x + a_yP_y + a_MM.From the law of demand we know that a_x will be:

Correct Answer
verified

For a steel factory,a decrease in the cost of electricity to the plant will cause the supply curve to:

Correct Answer
verified

An excise tax shifts the supply curve:

Correct Answer
verified

If an excise tax is imposed on a good,then the supply curve:

Correct Answer
verified

When the government imposes a price floor above the market price,the result will be that

Correct Answer
verified

Suppose that supply increases and demand decreases.What effect will this have on price and quantity?

Correct Answer
verified

An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline would shift the supply curve:

Correct Answer
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Consumer surplus is:

Correct Answer
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Given a linear supply function of the form Q_X^S = −10 + 5P_X,find the inverse linear supply function.

Correct Answer
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A

Demand shifters do NOT include the:

Correct Answer
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Correct Answer
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Destruction of 50 percent of this year's...
View Answer

Given a linear demand function of the form Q_X^d = 100 − 0.5P_X,find the inverse linear demand function.

Correct Answer
verified

An ad valorem tax causes the supply curve to:

Correct Answer
verified

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.Based on this information,we know that good Y is

Correct Answer
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A change in income will NOT lead to:

Correct Answer
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A

Which of the following is probably NOT a normal good?

Correct Answer
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Suppose market demand and supply are given by Q^d = 100 − 2P and Q^s = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

Correct Answer
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D

Suppose X and Y are complements and demand for X is Q_x^d = ₀ + _XP_X + _YP_Y + _MM + _HH.Then we know:

Correct Answer
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Good X is a normal good if an increase in income leads to:

Correct Answer
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Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X.Compute the surplus received by consumers and producers.

Correct Answer
verified

Exam 2: Market Forces: Demand and Supply

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM.From the law of demand we know that ax will be:

Correct AnswerverifiedShow Answer

For a steel factory,a decrease in the cost of electricity to the plant will cause the supply curve to:

Correct AnswerverifiedShow Answer

An excise tax shifts the supply curve:

Correct AnswerverifiedShow Answer

If an excise tax is imposed on a good,then the supply curve:

Correct AnswerverifiedShow Answer

When the government imposes a price floor above the market price,the result will be that

Correct AnswerverifiedShow Answer

Suppose that supply increases and demand decreases.What effect will this have on price and quantity?

Correct AnswerverifiedShow Answer

An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline would shift the supply curve:

Correct AnswerverifiedShow Answer

Consumer surplus is:

Correct AnswerverifiedShow Answer

Given a linear supply function of the form QXS = −10 + 5PX,find the inverse linear supply function.

Correct AnswerverifiedA

Demand shifters do NOT include the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDestruction of 50 percent of this year's...View AnswerShow Answer

Given a linear demand function of the form QXd = 100 − 0.5PX,find the inverse linear demand function.

Correct AnswerverifiedShow Answer

An ad valorem tax causes the supply curve to:

Correct AnswerverifiedShow Answer

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.Based on this information,we know that good Y is

Correct AnswerverifiedShow Answer

A change in income will NOT lead to:

Correct AnswerverifiedA

Which of the following is probably NOT a normal good?

Correct AnswerverifiedShow Answer

Suppose market demand and supply are given by Qd = 100 − 2P and Qs = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

Correct AnswerverifiedD

Suppose X and Y are complements and demand for X is Qxd = 0 + XPX + YPY + MM + HH.Then we know:

Correct AnswerverifiedShow Answer

Good X is a normal good if an increase in income leads to:

Correct AnswerverifiedShow Answer

Consider a market characterized by the following inverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.Compute the surplus received by consumers and producers.

Correct AnswerverifiedShow Answer

Suppose the demand for good X is given by Q^d_x = 10 + a_xP_x + a_yP_y + a_MM.From the law of demand we know that a_x will be:

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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Given a linear supply function of the form Q_X^S = −10 + 5P_X,find the inverse linear supply function.

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
Destruction of 50 percent of this year's...
View Answer

Given a linear demand function of the form Q_X^d = 100 − 0.5P_X,find the inverse linear demand function.

Correct Answer
verified

Correct Answer
verified

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.Based on this information,we know that good Y is

Correct Answer
verified

Correct Answer
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A

Correct Answer
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Suppose market demand and supply are given by Q^d = 100 − 2P and Q^s = 5 + 3P.If a price floor of $30 is set,what will be size of the resulting surplus?

Correct Answer
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D

Suppose X and Y are complements and demand for X is Q_x^d = ₀ + _XP_X + _YP_Y + _MM + _HH.Then we know:

Correct Answer
verified

Correct Answer
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Consider a market characterized by the following inverse demand and supply functions: P_X = 10 − 2Q_X and P_X = 2 + 2Q_X.Compute the surplus received by consumers and producers.

Correct Answer
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