Question 1

Given a linear supply function of the form Q_X^S = 3,000 + 3P_X - 2P_r - P_w, find the inverse linear supply function assuming P_r = $1,000 and P_w = $100.

Accepted Answer

The answer of Given a linear supply function of the...

Question 2

All else held constant, as additional firms enter an industry

Accepted Answer

As additional firms enter an industry, the supply curve shifts to the right because there is more output available at each given price. This is because there are more firms producing the same product, which increases the overall supply.

Question 3

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit, then the total value a consumer receives from consuming the equilibrium quantity is

Accepted Answer

To find the total value a consumer receives from consuming the equilibrium quantity, we need to use the formula:

Total value = Price x Quantity

At equilibrium, the price of X is $5 per unit. To find the equilibrium quantity, we need to set the demand equal to the supply and solve for Q:

20 - 2P = P
20 = 3P
P = $6.67
Q = (20 - 2P)/3
Q = 4.44

So the equilibrium quantity is 4.44 units.

Therefore, the total value received by the consumer is:

Total value = Price x Quantity
Total value = $5 x 4.44
Total value = $22.22

So the correct answer is B) $75.

Question 4

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 consumers receive when an $8 per unit price floor is imposed on the market.

Accepted Answer

The answer of Consider a market characterized by the following...

Question 5

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 producers receive when an $8 per unit price floor is imposed on the market.

Accepted Answer

The answer of Consider a market characterized by the following...

Question 6

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

Accepted Answer

To find the inverse demand function, solve the given demand function for price (P). The given function is Q = 100 - 0.5P. Rearranging for P gives P = 200 - 2Q, which matches choice A.

Question 7

Suppose the market supply for good X is given by Q_X^S = -100 + 5P_X.If the equilibrium price of X is $100 per unit then producer surplus is

Accepted Answer

The answer of Suppose the market supply for good X...

Question 8

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

Accepted Answer

The answer of Suppose there is a simultaneous increase in...

Question 9

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit then consumer surplus is

Accepted Answer

The answer of Suppose the market demand for good X...

Question 10

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

Accepted Answer

An excise tax on suppliers effectively increases their cost of providing each gallon of gasoline by $1.00. This increase in cost decreases the quantity supplied at every price point, which is represented graphically by shifting the supply curve upward (or to the left) by the amount of the tax.

Question 11

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 equilibrium price and quantity in this market.

Accepted Answer

To find the equilibrium, set the demand equal to the supply: 10 - 2Q = 2 + 2Q. Solving for Q gives Q = 2. Substitute Q = 2 into either the demand or supply equation to find P = 6. Thus, the equilibrium price is $6 and the equilibrium quantity is 2 units.

Question 12

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 loss in social welfare when an $8 per unit price floor is imposed on the market.

Accepted Answer

To find the loss in social welfare, we first need to find the equilibrium quantity and price without the price floor. Set the demand and supply functions equal to each other and solve for Q:

10 - 2QS1U1B1XS1U1B0 = 2 + 2QS1U1B1XS1U1B0S1U1B1

8 = 4QS1U1B1XS1U1B0S1U1B1

QS1U1B1XS1U1B0S1U1B1 = 2

Substituting back into either the demand or supply function, we get P = $6 per unit.

With a price floor of $8, the quantity demanded will be less than the quantity supplied, causing a surplus. The new quantity sold will be at the intersection of the demand curve and the price floor line:

10 - 2QS1U1B1XS1U1B0 = 8

QS1U1B1XS1U1B0 = 1

Substituting back into the demand or supply function, we get P = $8 per unit.

Consumer surplus before the price floor is:

(1/2)(10 - 6)(2) = $4

Consumer surplus after the price floor is:

(1/2)(10 - 8)(1) = $1

Producer surplus, which is also total surplus since there are no externalities, before the price floor is:

(1/2)(6 - 2)(2) = $4

Producer surplus after the price floor is:

(1/2)(8 - 2)(1) = $3

The loss in social welfare is the sum of the loss in consumer surplus and the loss in producer surplus:

($4 - $1) + ($4 - $3) = $4 - $1 = $3

Therefore, the correct answer is B) $3.

Question 13

Good X is an inferior good if a decrease in income leads to

Accepted Answer

An inferior good is one where demand increases when consumer income decreases, as consumers turn to less expensive alternatives.

Question 14

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Accepted Answer

To find the inverse demand function, we need to solve for P_X in terms of Q_X, P_Y, and M. First, substitute P_Y = 10 and M = 20,000 into the demand function: Q_X^d = 500 - 2P_X - 3P_Y + 0.01M Q_X^d = 500 - 2P_X - 30 + 200 Q_X^d = 670 - 2P_X Next, isolate P_X on one side of the equation: 2P_X = 670 - Q_X^d P_X = (670 - Q_X^d)/2 Simplify the expression by dividing both sides by 2: P_X = 335 - 0.5Q_X Therefore, the inverse demand function is P_X = 335 - 0.5Q_X.

Question 15

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 - 2Q_X and P_X = 2 + 2Q_X_. An $8 per unit price floor will result in a

Accepted Answer

The answer of Consider a market characterized by the following...

Question 16

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

Accepted Answer

To find the inverse function, solve for P_X. Starting with Q_X = −10 + 5P_X, rearrange to get P_X = (Q_X + 10) / 5, which simplifies to P_X = 2 + 0.2Q_X.

Question 17

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit then consumers' expenditure on X is

Accepted Answer

To find consumer expenditure, we need to know the quantity of good X consumed at the equilibrium price. To find this, we set the given demand equation equal to the equilibrium price, and solve for quantity:

5 = 20 - 2P
2P = 15
P = 7.5

Substituting P = 5 into the demand equation gives:

Q = (20 - 2P)/2 = (20 - 2(5))/2 = 5

Therefore, consumers will buy 5 units of good X at a price of $5, so their expenditure will be:

Expenditure = Price x Quantity = $5 x 5 = $25

So the answer is (C).

Question 18

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.

Accepted Answer

The answer of Consider a market characterized by the following...

Question 19

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 number of units and the price at which those units will be exchanged when there is an $8 per unit price floor.

Accepted Answer

The answer of Consider a market characterized by the following...

Question 20

Suppose the market supply for good X is given by Q_X^S = -100 + 5P_X.If the equilibrium price of X is $100 per unit then producers' revenue from X is

Accepted Answer

At equilibrium, the quantity demanded and quantity supplied are equal. Therefore, solve for Q at P = $100: 100 = -100 + 5Q_X Q_X = 40 Revenue = P x Q = $100 x 40 = $4,000 Producers' revenue from X would be the same as the total revenue from selling 40 units at $100 each, which is $4,000 x 10 = $40,000.

Quiz 2: Market Forces: Demand and Supply

Given a linear supply function of the form QXS = 3,000 + 3PX - 2Pr - Pw, find the inverse linear supply function assuming Pr = $1,000 and Pw = $100.

All else held constant, as additional firms enter an industry

Suppose the market demand for good X is given by QXd = 20 - 2PX.If the equilibrium price of X is $5 per unit, then the total value a consumer receives from consuming the equilibrium quantity is

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the surplus consumers receive when an $8 per unit price floor is imposed on the market.

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the surplus producers receive when an $8 per unit price floor is imposed on the market.

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

Suppose the market supply for good X is given by QXS = -100 + 5PX.If the equilibrium price of X is $100 per unit then producer surplus is

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

Suppose the market demand for good X is given by QXd = 20 - 2PX.If the equilibrium price of X is $5 per unit then consumer surplus is

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

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the equilibrium price and quantity in this market.

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.

Good X is an inferior good if a decrease in income leads to

Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. An $8 per unit price floor will result in a

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

Suppose the market demand for good X is given by QXd = 20 - 2PX.If the equilibrium price of X is $5 per unit then consumers' expenditure on X is

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.

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the number of units and the price at which those units will be exchanged when there is an $8 per unit price floor.

Suppose the market supply for good X is given by QXS = -100 + 5PX.If the equilibrium price of X is $100 per unit then producers' revenue from X is

Given a linear supply function of the form Q_X^S = 3,000 + 3P_X - 2P_r - P_w, find the inverse linear supply function assuming P_r = $1,000 and P_w = $100.

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit, then the total value a consumer receives from consuming the equilibrium quantity is

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 consumers receive when an $8 per unit price floor is imposed on the market.

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 producers receive when an $8 per unit price floor is imposed on the market.

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

Suppose the market supply for good X is given by Q_X^S = -100 + 5P_X.If the equilibrium price of X is $100 per unit then producer surplus is

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit then consumer surplus is

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 equilibrium price and quantity in this market.

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 loss in social welfare when an $8 per unit price floor is imposed on the market.

Given a linear demand function of the form Q_X^d = 500 - 2P_X - 3P_Y + 0.01M, find the inverse linear demand function assuming M = 20,000 and P_Y = 10.

Consider a market characterized by the following inverse demand and supply functions: P_X = 10 - 2Q_X and P_X = 2 + 2Q_X_. An $8 per unit price floor will result in a

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

Suppose the market demand for good X is given by Q_X^d = 20 - 2P_X.If the equilibrium price of X is $5 per unit then consumers' expenditure on X is

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.

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 number of units and the price at which those units will be exchanged when there is an $8 per unit price floor.

Suppose the market supply for good X is given by Q_X^S = -100 + 5P_X.If the equilibrium price of X is $100 per unit then producers' revenue from X is