Question 1

New oak tables are normal goods. What will happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of wood saws increased?

Accepted Answer

A)   price will fall and the effect on quantity is ambiguous
B)   price will rise and the effect on quantity is ambiguous
C)   quantity will fall and the effect on price is ambiguous
D)   quantity will rise and the effect on price is ambiguousE) B) and C)
F) None of the above

Question 2

What can be said about economists in general?

Accepted Answer

A)   They do not try to explain people's tastes, but do try to explain what happens when tastes change.
B)   They must be able to explain people's tastes to explain what happens when tastes change.
C)   They do not believe that people's tastes determine demand and therefore ignore the subject of tastes.
D)   They believe that tastes and demand move in opposite directions.E) B) and C)
F) B) and D)

Question 3

Which of the following is NOT a determinant of demand?

Accepted Answer

A)   tastes
B)   technology
C)   income
D)   the price of related goodsE) All of the above
F) C) and D)

Question 4

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)   price will be $20 and quantity will be 30
B)   price will be $40 and quantity will be 30
C)   price will be $30 and quantity will be 40
D)   price will be $35 and quantity will be 30E) All of the above
F) A) and B)

Question 5

-Refer to the Table 4-1. If the price were $12, what would happen?

Accepted Answer

A)   A surplus of 50 units would exist and the price would tend to fall.
B)   A surplus of 10 units would exist and the price would tend to fall.
C)   A surplus of 25 units would exist and the price would tend to fall.
D)   A shortage of 25 units would exist and the price would tend to rise.E) None of the above
F) A) and B)

Question 6

Anyone willing to pay the market price for a resource may have it.

Accepted Answer

A) True 
 B)False

Question 7

Figure 4-1
 
-Refer to the Figure 4-1. What is the movement from S1 to S called?

Accepted Answer

A)   a decrease in supply
B)   a decrease in quantity supplied
C)   an increase in supply
D)   an increase in quantity suppliedE) None of the above
F) All of the above

Question 8

Market demand is given as Qd =150 - 3P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)   price will be $20 and quantity will be 40
B)   price will be $30and quantity will be 60
C)   price will be $40 and quantity will be 60
D)   price will be $30 and quantity will be 20E) B) and D)
F) All of the above

Question 9

Figure 4-3
 
-Refer to the Figure 4-3. In this market, what are the equilibrium price and quantity?

Accepted Answer

A)   $14 and 30
B)   $12 and 60
C)   $10 and 50
D)   $8 and 50E) B) and C)
F) None of the above

Question 10

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $385 to $390, what is the price elasticity of demand?

Accepted Answer

A)   0.1
B)   0.3
C)   1.0
D)   3.4E) A) and C)
F) A) and B)

Question 11

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly (a complementary good)  increased, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Accepted Answer

A)   price will fall and the effect on quantity is ambiguous
B)   price will rise and the effect on quantity is ambiguous
C)   quantity will fall and the effect on price is ambiguous
D)   effect on both price and quantity is ambiguousE) A) and D)
F) C) and D)

Question 12

Suppose that the number of buyers in a market increases and a technological advancement occurs. What would we expect to happen in the market?

Accepted Answer

A)   The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
B)   The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
C)   Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
D)   Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.E) A) and D)
F) A) and C)

Question 13

Market demand is given as Qd = 120 - 2P. Market supply is given as Qs = 2P + 40. What would result if the market price were $10?

Accepted Answer

A)   a shortage of 40
B)   a surplus of 40
C)   a surplus of 80
D)   a shortage of 80E) A) and C)
F) All of the above

Question 14

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

Accepted Answer

A)   price will rise
B)   price will fall
C)   price will stay exactly the same
D)   price change will be ambiguousE) B) and D)
F) A) and D)

Question 15

Wheat is the main input in the production of flour. All else equal, if the price of wheat increases, what would we expect?

Accepted Answer

A)   the supply of flour to increase
B)   the supply of flour to decrease
C)   the demand for flour to increase
D)   the demand for flour to decreaseE) A) and B)
F) B) and D)

Question 16

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Accepted Answer

A) True 
 B)False

Question 17

Market demand is given as Qd = 80 - P. Market supply is given as Qs = 3P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Accepted Answer

A)   price will be $20 and quantity will be 60
B)   price will be $45 and quantity will be 15
C)   price will be $40 and quantity will be 20
D)   price will be $15 and quantity will be 45E) All of the above
F) None of the above

Question 18

Market demand is given as Qd = 95 - P. Market supply is given as Qs = 3P + 15. What would result if the market price were $10?

Accepted Answer

A)   a shortage of 20
B)   a surplus of 20
C)   a surplus of 40
D)   a shortage of 40E) A) and D)
F) B) and D)

Question 19

Table 4-3
 
-Refer to the Table 4-3. When the price of the good is $1.50, what is the quantity demanded in this market?

Accepted Answer

A)   14 units
B)   24 units
C)   31 units
D)   42 unitsE) A) and B)
F) A) and C)

Question 20

What is the unique point at which the supply and demand curves intersect?

Accepted Answer

A)   market unity
B)   an agreement
C)   cohesion
D)   equilibriumE) A) and D)
F) A) and C)

Exam 4: The Market Forces of Supply and Demand

Market demand is given as Qd = 95 - P. Market supply is given as Qs = 3P + 15. What would result if the market price were $10?

Correct AnswerverifiedShow Answer

Figure 4-1 -Refer to the Figure 4-1. What is the movement from S1 to S called?

Correct AnswerverifiedShow Answer

Wheat is the main input in the production of flour. All else equal, if the price of wheat increases, what would we expect?

Correct AnswerverifiedShow Answer

What can be said about economists in general?

Correct AnswerverifiedShow Answer

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Correct AnswerverifiedShow Answer

Anyone willing to pay the market price for a resource may have it.

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly (a complementary good) increased, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Correct AnswerverifiedShow Answer

Market demand is given as Qd =150 - 3P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 70 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

Figure 4-3 -Refer to the Figure 4-3. In this market, what are the equilibrium price and quantity?

Correct AnswerverifiedShow Answer

Table 4-3 -Refer to the Table 4-3. When the price of the good is $1.50, what is the quantity demanded in this market?

Correct AnswerverifiedShow Answer

New oak tables are normal goods. What will happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of wood saws increased?

Correct AnswerverifiedShow Answer

Market demand is given as QD = 250 - 0.5P. Market supply is given as QS = 2P. If price increases from $385 to $390, what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 80 - P. Market supply is given as Qs = 3P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Correct AnswerverifiedShow Answer

What is the unique point at which the supply and demand curves intersect?

Correct AnswerverifiedShow Answer

Which of the following is NOT a determinant of demand?

Correct AnswerverifiedShow Answer

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

Correct AnswerverifiedShow Answer

Market demand is given as Qd = 120 - 2P. Market supply is given as Qs = 2P + 40. What would result if the market price were $10?

Correct AnswerverifiedShow Answer

Suppose that the number of buyers in a market increases and a technological advancement occurs. What would we expect to happen in the market?

Correct AnswerverifiedShow Answer

-Refer to the Table 4-1. If the price were $12, what would happen?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified