Question 1

When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in

Accepted Answer

A reduction in price leads to an increase in quantity demanded, but not necessarily an increase in demand. Therefore, the correct answer is an increase in the quantity of this wine demanded.

Question 2

When the average price of videocassette recorders (VCRs) fall, the result is

Accepted Answer

When the price of a good falls, the quantity demanded typically increases, according to the law of demand.

Question 3

Which of the following would lead to a DECREASE in the demand for tennis balls?

Accepted Answer

A decrease in average household income would lead to a decrease in the demand for normal goods, such as tennis balls, as people have less money to spend.

Question 4

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$
- If the price is $10, there is a

Accepted Answer

At a price of $10, the quantity demanded $Q_d = 50 - 4(10) = 10$ and the quantity supplied $Q_s = 20 + 2(10) = 40$. This results in a surplus of $40 - 10 = 30$ units.

Question 5

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$
- If the price is $2, there is a

Accepted Answer

The answer of Use the following demand and supply functions...

Question 6

Which of the following would increase the supply of corn?

Accepted Answer

If the price of wheat decreases, farmers may choose to switch to growing corn instead, as it becomes relatively more profitable compared to wheat. Therefore, this would lead to an increase in the supply of corn.

Question 7

Use the following general linear demand relation to answer questions  : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-If M = $15,000 and $P _ { R }$ = $20 and the supply function is $Q _ { s } = 30 + 3 P$ , equilibrium price and quantity are, respectively,

Accepted Answer

The correct answer is A because when M = $15,000 and $P _ { R }$ = $20, the demand function becomes $Q _ { d } = 680 - 9 P + 90 - 80 = 790 - 9 P$. Setting this equal to the supply function $Q _ { s } = 30 + 3 P$ and solving for P gives P = $55. Substituting this back into either the demand or supply function gives Q = 195.

Question 8

Use the following general linear demand relation to answer questions  : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-If M = $15,000 and $P _ {R }$ = $20, the demand function is

Accepted Answer

The answer of Use the following general linear demand relation...

Question 9

-If price is $16 there is

Accepted Answer

A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price. If the price is $16 and there is a surplus of 250 units, it means that at this price, suppliers are willing to sell 250 more units than consumers are willing to buy.

Question 10

If the price of a complement decreases, all else equal,

Accepted Answer

A decrease in the price of a complement will lead to an increase in demand, as the complement becomes more affordable and desirable to consumers, leading them to purchase more of the complement's paired good. For example, if the price of ice cream cones decreases, consumers may be more likely to buy ice cream, increasing the demand for ice cream overall.

Question 11

The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT

Accepted Answer

The market demand curve shifts when there is a change in factors other than the price of the good, such as changes in consumer income, prices of related goods, and consumer preferences and tastes. However, a change in the price of the good itself would not shift the demand curve, but would instead result in a movement along the existing demand curve.

Question 12

Use the following general linear demand relation to answer questions  : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-From this relation it is apparent that the good is:

Accepted Answer

The answer of Use the following general linear demand relation...

Question 13

Use the following general linear demand relation to answer questions  : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-If M = $15,000 and $P _ { R }$ = $20 and the supply function is $Q _ { s } = 30 + 3 P$ , then, when the price of the good is $60,

Accepted Answer

The answer of Use the following general linear demand relation...

Question 14

-If price is $8,

Accepted Answer

According to the graph, at a price of $8, the quantity demanded is 550 units and the quantity supplied is only 400 units. This creates a shortage of 150 units because the quantity demanded exceeds the quantity supplied.

Question 15

Which of the following will cause a change in quantity supplied?

Accepted Answer

A change in the market price of the good will cause a movement along the supply curve, resulting in a change in the quantity supplied. This is because a higher price will increase the incentive for suppliers to produce and sell more, while a lower price will decrease this incentive. Choices A, B, and C may cause a shift in the supply curve, but will not necessarily result in a change in the quantity supplied at a given price.

Question 16

Suppose that the market for salad dressing is in equilibrium. Then the price of lettuce rises. What will happen?

Accepted Answer

When the price of lettuce rises, salads become more expensive to make, leading to a decrease in the demand for salad dressing since fewer people might be buying or making salads. This is because salad dressing and lettuce are complementary goods; an increase in the price of one leads to a decrease in the demand for the other.

Question 17

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ 
-Equilibrium price and output are

Accepted Answer

The answer of Use the following demand and supply functions...

Question 18

-If the price is $6, the resulting

Accepted Answer

A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price, leading to downward pressure on the price to clear the excess supply.

Question 19

Use the following general linear demand relation to answer questions  : $$Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$$ where M is income and $P _ { R }$ is the price of a related good, R.
-If M = $15,000 and $P _ { R }$ = $20 and the supply function is $Q _ { s } = 30 + 3 P$ , then, when the price of the good is $40,

Accepted Answer

When the price is $40, the quantity demanded is 680 - 9(40) + 0.006(15000) - 4(20) = 500 units, and the quantity supplied is 30 + 3(40) = 150 units. Therefore, there is a shortage of 500 - 150 = 350 units, not 180. However, the closest option indicating a shortage is B, which suggests a shortage, but the calculation indicates a larger shortage than stated.

Question 20

If input prices increase, all else equal,

Accepted Answer

An increase in input prices will increase the cost of production for the supplier. This will lead to a decrease in profit margins and reduce the incentive to supply the product at the same level as before. Hence, supply will decrease.

Quiz 2: Demand, Supply, and Market Equilibrium

When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in

When the average price of videocassette recorders (VCRs) fall, the result is

Which of the following would lead to a DECREASE in the demand for tennis balls?

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ - If the price is $10, there is a

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ - If the price is $2, there is a

Which of the following would increase the supply of corn?

Use the following general linear demand relation to answer questions : $Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$ where M is income and $P _ { R }$ is the price of a related good, R. -If M = $15,000 and $P _ {R }$ = $20, the demand function is

-If price is $16 there is

If the price of a complement decreases, all else equal,

The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT

Use the following general linear demand relation to answer questions : $Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$ where M is income and $P _ { R }$ is the price of a related good, R. -From this relation it is apparent that the good is:

-If price is $8,

Which of the following will cause a change in quantity supplied?

Suppose that the market for salad dressing is in equilibrium. Then the price of lettuce rises. What will happen?

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ -Equilibrium price and output are

-If the price is $6, the resulting

If input prices increase, all else equal,

Quiz 2: Demand, Supply, and Market Equilibrium

When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in

When the average price of videocassette recorders (VCRs) fall, the result is

Which of the following would lead to a DECREASE in the demand for tennis balls?

Use the following demand and supply functions to answer the following. Demand: Qd=50−4PQ _ { d } = 50 - 4 PQd​=50−4P Supply: Qs=20+2PQ _ { s } = 20 + 2 PQs​=20+2P - If the price is $10, there is a

Use the following demand and supply functions to answer the following. Demand: Qd=50−4PQ _ { d } = 50 - 4 PQd​=50−4P Supply: Qs=20+2PQ _ { s } = 20 + 2 PQs​=20+2P - If the price is $2, there is a

Which of the following would increase the supply of corn?

-If price is $16 there is

If the price of a complement decreases, all else equal,

The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT

Use the following general linear demand relation to answer questions : Qd=680−9P+0.006M−4PRQ _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }Qd​=680−9P+0.006M−4PR​ where M is income and PRP _ { R }PR​ is the price of a related good, R. -From this relation it is apparent that the good is:

-If price is $8,

Which of the following will cause a change in quantity supplied?

Suppose that the market for salad dressing is in equilibrium. Then the price of lettuce rises. What will happen?

Use the following demand and supply functions to answer the following. Demand: Qd=50−4PQ _ { d } = 50 - 4 PQd​=50−4P Supply: Qs=20+2PQ _ { s } = 20 + 2 PQs​=20+2P -Equilibrium price and output are

-If the price is $6, the resulting

If input prices increase, all else equal,

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ - If the price is $10, there is a

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ - If the price is $2, there is a

Use the following general linear demand relation to answer questions : $Q _ { d } = 680 - 9 P + 0.006 M - 4 P _ { R }$ where M is income and $P _ { R }$ is the price of a related good, R. -From this relation it is apparent that the good is:

Use the following demand and supply functions to answer the following. Demand: $Q _ { d } = 50 - 4 P$ Supply: $Q _ { s } = 20 + 2 P$ -Equilibrium price and output are