Question 1

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

Accepted Answer

When the government imposes a price floor above the market price, it creates a situation where suppliers are unable to sell all of their goods at the higher price, leading to a surplus. This is because the demand for the goods at the higher price is lower than the supply, resulting in excess supply. Therefore, choice A is the correct answer.

Question 2

For a wood furniture manufacturer,an increase in the cost of lumber will cause the supply curve to:

Accepted Answer

An increase in the cost of lumber will lead to higher production costs for the wood furniture manufacturer, which will reduce the profitability of producing the same quantity of furniture. As a result, the manufacturer will supply a smaller quantity of wood furniture at any given price level. Therefore, the supply curve will shift to the left, indicating a decrease in supply.

Question 3

All else held constant,as additional firms enter an industry:

Accepted Answer

As additional firms enter the industry, the total output of the industry increases, resulting in more output available at each given price. This is due to the increased competition and supply in the market. Thus, choice A is the best choice.

Question 4

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

Accepted Answer

When there is an increase in demand and a decrease in supply simultaneously, the equilibrium price will rise due to higher demand for fewer available goods.

Question 5

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 6

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

To find the inverse supply function, substitute P_r = 1000 and P_w = 100 into the supply function and solve for P_X in terms of Q_X^S.

Question 7

Demand shifters do NOT include the:

Accepted Answer

The price of the good is not a demand shifter, but rather the factor that is being affected by the demand shifters. The factors that can shift the demand curve include consumer tastes and preferences, the price of other related goods, and consumer expectations about future prices of the good.

Question 8

In a competitive market,the market demand is Q^d = 70 − 3P and the market supply is Q^s = 6P.A price ceiling of $4 will result in a:

Accepted Answer

To find the equilibrium quantity, we set the market demand equal to the market supply:

70 − 3P = 6P

9P = 70

P = 7.78 (rounded to two decimal places)

Since the price ceiling is $4, which is below the equilibrium price, there will be excess demand or a shortage.

At a price of $4: 
Market demand = 70 − 3(4) = 58

Market supply = 6(4) = 24

Shortage = 58 − 24 = 34

Therefore, the correct answer is B, a shortage of 34 units.

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

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 11

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 12

Jane pays the market price of $69 for a new pair of running shoes,even though she would be happy to pay a maximum of $100 for the same pair of shoes.This is an example of the concept of:

Accepted Answer

Consumer surplus is the difference between the maximum amount a consumer is willing to pay for a good or service and the actual amount they pay for it. In this case, Jane is willing to pay up to $100 for the shoes but only pays $69, so her consumer surplus is $31.

Question 13

If supply increases,then the:

Accepted Answer

The answer of If supply increases,then the:
...

Question 14

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 15

The law of demand indicates that as the price of a good increases,the quantity that:

Accepted Answer

The law of demand states that there is an inverse relationship between the price of a good and the quantity demanded by consumers. Therefore, as the price of a good increases, the quantity that buyers are able to purchase decreases.

Question 16

Which of the following is probably NOT a normal good?

Accepted Answer

Intercity passenger bus travel is more likely to be an inferior good, meaning as income levels rise, demand for this service decreases. Designer jeans, diamond rings, and new automobiles are typically considered normal goods, as demand for these items tends to increase as income levels rise.

Question 17

If demand increases,then the:

Accepted Answer

When demand increases, the demand curve shifts to the right. This means that at any given price, consumers are willing to buy more of the product. This results in an increase in the equilibrium quantity and an increase in the equilibrium price. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect.

Question 18

Graphically,an increase in the number of vegetarians will cause the demand curve for tofu (a meat substitute)to:

Accepted Answer

An increase in the number of vegetarians means that there are more people who demand tofu as a meat substitute. This will shift the demand curve for tofu leftward, indicating a decrease in demand for traditional meat products and a corresponding increase in demand for tofu as a substitute.

Question 19

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 the given demand function for P_X. Given: M = 20,000 and P_Y = 10. Substituting the values, we get: Q_X = (500 - 30 - 200) / 2 = 135 Substituting this value of Q_X in the demand function, we get: P_X = (500 - 2(135) - 3(10) + 0.01(20,000)) / 2 P_X = 335 Therefore, the inverse demand function is P_X = 335 - 0.5Q_X, which is option B.

Question 20

Which of the following pairs of goods are probably complements?

Accepted Answer

Ketchup and french fries are commonly consumed together, indicating that they are complementary goods.

Quiz 2: Market Forces: Demand and Supply

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

For a wood furniture manufacturer,an increase in the cost of lumber will cause the supply curve to:

All else held constant,as additional firms enter an industry:

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

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

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.

Demand shifters do NOT include the:

In a competitive market,the market demand is Q^d = 70 − 3P and the market supply is Q^s = 6P.A price ceiling of $4 will result in a:

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:

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

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

Jane pays the market price of $69 for a new pair of running shoes,even though she would be happy to pay a maximum of $100 for the same pair of shoes.This is an example of the concept of:

If supply increases,then the:

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

The law of demand indicates that as the price of a good increases,the quantity that:

Which of the following is probably NOT a normal good?

If demand increases,then the:

Graphically,an increase in the number of vegetarians will cause the demand curve for tofu (a meat substitute) to:

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.

Which of the following pairs of goods are probably complements?

Quiz 2: Market Forces: Demand and Supply

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

For a wood furniture manufacturer,an increase in the cost of lumber will cause the supply curve to:

All else held constant,as additional firms enter an industry:

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

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

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.

Demand shifters do NOT include the:

In a competitive market,the market demand is Qd = 70 − 3P and the market supply is Qs = 6P.A price ceiling of $4 will result in a:

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:

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

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

Jane pays the market price of $69 for a new pair of running shoes,even though she would be happy to pay a maximum of $100 for the same pair of shoes.This is an example of the concept of:

If supply increases,then the:

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

The law of demand indicates that as the price of a good increases,the quantity that:

Which of the following is probably NOT a normal good?

If demand increases,then the:

Graphically,an increase in the number of vegetarians will cause the demand curve for tofu (a meat substitute) 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.

Which of the following pairs of goods are probably complements?

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.

In a competitive market,the market demand is Q^d = 70 − 3P and the market supply is Q^s = 6P.A price ceiling of $4 will result in a:

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:

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

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

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.