Question 1

Holding all other factors constant, consumers demand more of a good the

Accepted Answer

A)  higher its price.
B)  lower its price.
C)  steeper the downward slope of the demand curve.
D)  steeper the upward slope of the demand curve.E) None of the above
F) A) and B)

Question 2

Suppose the following information is known about a market:
1. Sellers will not sell at all below a price of $2.
2. At a price of $10, any given seller will sell 10 units.
3. There are 100 identical sellers in the market.
Assuming a linear supply curve, use this information to derive the market supply curve.

Accepted Answer

First, Q = 100q since all firms are iden...

Question 3

Assume Joe is only willing to pay $5 for a Ferrari sports car.

Accepted Answer

A)  Joe is not considered part of the demand for Ferraris.
B)  Joe won't be sold a Ferrari.
C)  Joe is not considered rational.
D)  Joe's willingness to pay is not indicative of how much he values the Ferrari.E) A) and C)
F) A) and B)

Question 4

If a government-imposed price ceiling causes the observed price in a market to be below the equilibrium price

Accepted Answer

A)  there will be excess demand.
B)  there will be excess supply.
C)  the curves will shift to make a new equilibrium at the regulated price.
D)  None of the above.E) A) and B)
F) B) and D)

Question 5

An increase in the price of oil will

Accepted Answer

A)  shift the supply curve of oil to the left.
B)  shift the supply curve of oil to the right.
C)  leave the supply curve of oil unchanged.
D)  Not enough information to answer the question.E) All of the above
F) A) and B)

Question 6

Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a

Accepted Answer

A)  vertical line where Q = 10.
B)  vertical line where Q = 100.
C)  vertical line where Q = 1000.
D)  horizontal line where Q = 1000.E) A) and B)
F) B) and C)

Question 7

A price floor that is set above the equilibrium price

Accepted Answer

A)  causes suppliers to lose money.
B)  creates a shortage.
C)  is non-binding.
D)  creates a surplus.E) A) and D)
F) A) and C)

Question 8

The market supply curve is found by

Accepted Answer

A)  horizontally summing all individual supply curves at a price.
B)  vertically summing all individual supply curves at a quantity.
C)  either A or B above since they both give the same answer.
D)  None of the above.E) None of the above
F) A) and B)

Question 9

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

Accepted Answer

A)  the supply curve for soda pop to shift to the right.
B)  the supply curve for soda pop to become more vertical.
C)  the demand curve for soda pop to shift to the right.
D)  the demand curve for soda pop to shift to the left.E) None of the above
F) A) and C)

Question 10

As the price of a good increases, the change in the quantity demanded can be shown by

Accepted Answer

A)  shifting the demand curve leftward.
B)  shifting the demand curve rightward.
C)  moving down along the same demand curve.
D)  moving up along the same demand curve.E) A) and B)
F) All of the above

Question 11

A rightward shift of the demand curve will lead to a(n)

Accepted Answer

A)  increase in equilibrium price.
B)  excess demand at the old equilibrium price.
C)  increase in quantity supplied.
D)  All of the above.E) A) and C)
F) A) and D)

Question 12

Which of the following is NOT a characteristic of perfectly competitive markets?

Accepted Answer

A)  Buying the product requires you to hire a lawyer to write a contract.
B)  All market participants are price-takers.
C)  You are the only buyer of the product.
D)  All products are identical.E) A) and C)
F) A) and B)

Question 13

Agricultural price supports are

Accepted Answer

A)  price ceilings.
B)  price floors.
C)  quantity quotas.
D)  taxes.E) B) and C)
F) A) and B)

Question 14

A competitive equilibrium is described by

Accepted Answer

A)  a price only.
B)  a quantity only.
C)  the excess supply minus the excess demand.
D)  a price and a quantity.E) C) and D)
F) B) and D)

Question 15

Which of the following is NOT a characteristic of perfectly competitive markets?

Accepted Answer

A)  Transactions costs are a very small part of the sale.
B)  All market participants are price-takers.
C)  It is easy to find a trading partner.
D)  Products are differentiated.E) A) and D)
F) B) and C)

Question 16

Consumers and firms are known as price takers only if

Accepted Answer

A)  no market exists to determine the equilibrium price.
B)  they can set the market price.
C)  they cannot unilaterally affect the market price.
D)  excess demand exists.E) A) and B)
F) None of the above

Question 17

If oranges were found to cure cancer

Accepted Answer

A)  the equilibrium price of apples would likely fall.
B)  the equilibrium price of oranges would likely increase in the near term.
C)  the equilibrium quantity of oranges would likely increase.
D)  All of the above.E) C) and D)
F) A) and B)

Question 18

The expression "increase in quantity supplied" is illustrated graphically as a

Accepted Answer

A)  leftward shift in the supply curve.
B)  rightward shift in the supply curve.
C)  movement up along the supply curve.
D)  movement down along the supply curve.E) A) and C)
F) A) and B)

Question 19

A restriction on the number of people allowed to be medical doctors in the United States would most likely

Accepted Answer

A)  increase doctors' fees.
B)  decrease the demand for doctors.
C)  decrease the demand for nurses.
D)  decrease the number of people who get sick.E) C) and D)
F) All of the above

Question 20

The owner of a railroad that carries cargo should ________ supply when she foresees regulations that will ________ the cost of shipping cargo by truck.

Accepted Answer

A)  decrease; increase
B)  decrease; leave unchanged
C)  increase; increase
D)  leave unchanged; increaseE) B) and C)
F) C) and D)

Exam 2: Supply and Demand

Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a

Correct Answer
verified

Which of the following is NOT a characteristic of perfectly competitive markets?

Correct Answer
verified

A rightward shift of the demand curve will lead to a(n)

Correct Answer
verified

Holding all other factors constant, consumers demand more of a good the

Correct Answer
verified

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

Correct Answer
verified

The owner of a railroad that carries cargo should supply when she foresees regulations that will the cost of shipping cargo by truck.

Correct Answer
verified

Assume Joe is only willing to pay $5 for a Ferrari sports car.

Correct Answer
verified

Correct Answer
verified
First, Q = 100q since all firms are iden...
View Answer

A price floor that is set above the equilibrium price

Correct Answer
verified

The market supply curve is found by

Correct Answer
verified

Consumers and firms are known as price takers only if

Correct Answer
verified

If a government-imposed price ceiling causes the observed price in a market to be below the equilibrium price

Correct Answer
verified

If oranges were found to cure cancer

Correct Answer
verified

A competitive equilibrium is described by

Correct Answer
verified

As the price of a good increases, the change in the quantity demanded can be shown by

Correct Answer
verified

A restriction on the number of people allowed to be medical doctors in the United States would most likely

Correct Answer
verified

The expression "increase in quantity supplied" is illustrated graphically as a

Correct Answer
verified

Which of the following is NOT a characteristic of perfectly competitive markets?

Correct Answer
verified

Agricultural price supports are

Correct Answer
verified

An increase in the price of oil will

Correct Answer
verified

Exam 2: Supply and Demand

Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of perfectly competitive markets?

Correct AnswerverifiedShow Answer

A rightward shift of the demand curve will lead to a(n)

Correct AnswerverifiedShow Answer

Holding all other factors constant, consumers demand more of a good the

Correct AnswerverifiedShow Answer

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

Correct AnswerverifiedShow Answer

The owner of a railroad that carries cargo should ________ supply when she foresees regulations that will ________ the cost of shipping cargo by truck.

Correct AnswerverifiedShow Answer

Assume Joe is only willing to pay $5 for a Ferrari sports car.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFirst, Q = 100q since all firms are iden...View AnswerShow Answer

A price floor that is set above the equilibrium price

Correct AnswerverifiedShow Answer

The market supply curve is found by

Correct AnswerverifiedShow Answer

Consumers and firms are known as price takers only if

Correct AnswerverifiedShow Answer

If a government-imposed price ceiling causes the observed price in a market to be below the equilibrium price

Correct AnswerverifiedShow Answer

If oranges were found to cure cancer

Correct AnswerverifiedShow Answer

A competitive equilibrium is described by

Correct AnswerverifiedShow Answer

As the price of a good increases, the change in the quantity demanded can be shown by

Correct AnswerverifiedShow Answer

A restriction on the number of people allowed to be medical doctors in the United States would most likely

Correct AnswerverifiedShow Answer

The expression "increase in quantity supplied" is illustrated graphically as a

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of perfectly competitive markets?

Correct AnswerverifiedShow Answer

Agricultural price supports are

Correct AnswerverifiedShow Answer

An increase in the price of oil will

Correct AnswerverifiedShow 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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The owner of a railroad that carries cargo should supply when she foresees regulations that will the cost of shipping cargo by truck.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
First, Q = 100q since all firms are iden...
View Answer

Correct Answer
verified

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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Correct Answer
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