Question 1

What does the law of demand imply?

Accepted Answer

A)   When price rises, quantity demanded falls.
B)   When price rises, quantity demanded rises also.
C)   When price falls, quantity supplied rises.
D)   When price falls, quantity supplied falls also.E) None of the above
F) C) and D)

Question 2

What will happen in the rice market if buyers are expecting higher prices in the near future?

Accepted Answer

A)   Demand increases and supply decreases.
B)   Both demand and supply increase.
C)   Demand decreases and supply increases.
D)   Both demand and supply decrease.E) A) and B)
F) A) and C)

Question 3

Market demand is given as QD = 75 - P. Market supply is given as QS = 3P + 15. If price increases from $48 to $54, what is the price elasticity of demand?

Accepted Answer

A)   0.1
B)   0.7
C)   2.1
D)   2.7E) C) and D)
F) A) and B)

Question 4

Market demand is given as QD = 300 - 6P. Market supply is given as QS = 4P. If price increases from $35 to $38, what is the price elasticity of demand?

Accepted Answer

A)   0.3
B)   0.4
C)   1.7
D)   2.7E) B) and D)
F) C) and D)

Question 5

Figure 4-5
 
-Refer to the Figure 4-5. Which of the four graphs shown illustrates a decrease in quantity supplied?

Accepted Answer

A)   graph A
B)   graph B
C)   graph C
D)   graph DE) C) and D)
F) B) and D)

Question 6

The behaviour of buyers and sellers drives markets toward equilibrium.

Accepted Answer

A) True 
 B)False

Question 7

Suppose you make jewellery. If the price of silver increases, what would we expect you to do?

Accepted Answer

A)   be willing and able to produce less jewellery than before at each possible price
B)   be willing and able to produce more jewellery than before at each possible price
C)   face a greater demand for your jewellery
D)   face a weaker demand for your jewelleryE) A) and D)
F) A) and C)

Question 8

-Refer to the Table 4-1. If the price were $3, what would happen?

Accepted Answer

A)   A shortage of 100 units would exist and the price would tend to fall.
B)   A surplus of 50 units would exist and the price would tend to rise.
C)   A surplus of 25 units would exist and the price would tend to fall.
D)   A shortage of 100 units would exist and the price would tend to rise.E) B) and C)
F) None of the above

Question 9

Which of the following might be the reason when quantity demanded has decreased at every price?

Accepted Answer

A)   The number of buyers in the market has increased.
B)   Income has increased and this good is a normal good.
C)   The price of a complement good has increased.
D)   The price of a substitute good has increased.E) All of the above
F) C) and D)

Question 10

Market demand is given as QD = 100 - 2P. Market supply is given as QS = P + 200. If price increases from $40 to $45, what is the price elasticity of demand?

Accepted Answer

A)   0.2
B)   0.6
C)   3.7
D)   5.7E) A) and D)
F) B) and D)

Question 11

Market demand is given as QD = 200 - 3P. Market supply is given as QS = P + 10. If price increases from $10 to $15, what is the price elasticity of demand?

Accepted Answer

A)   0.2
B)   0.7
C)   1.3
D)   1.7E) B) and C)
F) A) and B)

Question 12

Figure 4-9
 
-Refer to the Figure 4-9. Which graph could be used to show the result of 5 percent of the country's smokers deciding to stop smoking?

Accepted Answer

A)   graph a
B)   graph b
C)   graph c
D)   both a and c could be used to show the resultE) B) and C)
F) A) and C)

Question 13

In a perfectly competitive market, buyers and sellers are price setters.

Accepted Answer

A) True 
 B)False

Question 14

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto workers negotiate higher wages?

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 15

Market demand is given as QD = 60 - P. Market supply is given as QS = 3P. If price increases from $35 to $40, what is the price elasticity of demand?

Accepted Answer

A)   0.3
B)   0.4
C)   1.7
D)   3.2E) A) and B)
F) C) and D)

Question 16

Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $15 to $16, what is the price elasticity of demand?

Accepted Answer

A)   0.3
B)   1.0
C)   1.1
D)   3.4E) A) and C)
F) All of the above

Question 17

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

Accepted Answer

A)   an increase in supply and demand
B)   an increase in supply and a decrease in demand
C)   a decrease in supply and an increase in demand
D)   a decrease in supply and demandE) A) and C)
F) C) and D)

Question 18

Which of the following demonstrates the law of demand?

Accepted Answer

A)   Jon buys more pretzels at $1.50 each since he got a $1 raise at work.
B)   Melissa buys fewer muffins at $0.75 each than at $1 each.
C)   Johan buys more burgers at $2 each than at $4 each.
D)   Kendra buys fewer milk chocolate bars at $0.60 each since the price of white chocolate bars fell to $0.50 each.E) All of the above
F) A) and B)

Question 19

What might cause a movement along the supply curve?

Accepted Answer

A)   a change in technology
B)   a change in input prices
C)   a change in expectations about future prices
D)   a change in the price of the good or serviceE) A) and B)
F) C) and D)

Question 20

Market demand is given as Qd = 120 - 2P. Market supply is given as Qs = 2P + 40. What would result if the market price were $50?

Accepted Answer

A)   a shortage of 120
B)   a surplus of 120
C)   a surplus of 140
D)   a shortage of 140E) None of the above
F) A) and D)

Exam 4: The Market Forces of Supply and Demand

Market demand is given as QD = 100 - 2P. Market supply is given as QS = P + 200. If price increases from $40 to $45, what is the price elasticity of demand?

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Market demand is given as QD = 60 - P. Market supply is given as QS = 3P. If price increases from $35 to $40, what is the price elasticity of demand?

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What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto workers negotiate higher wages?

Correct AnswerverifiedShow Answer

Figure 4-9 -Refer to the Figure 4-9. Which graph could be used to show the result of 5 percent of the country's smokers deciding to stop smoking?

Correct AnswerverifiedShow Answer

Market demand is given as QD = 200 - 3P. Market supply is given as QS = P + 10. If price increases from $10 to $15, what is the price elasticity of demand?

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What will happen in the rice market if buyers are expecting higher prices in the near future?

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In a perfectly competitive market, buyers and sellers are price setters.

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What might cause a movement along the supply curve?

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Figure 4-5 -Refer to the Figure 4-5. Which of the four graphs shown illustrates a decrease in quantity supplied?

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What does the law of demand imply?

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Market demand is given as Qd = 120 - 2P. Market supply is given as Qs = 2P + 40. What would result if the market price were $50?

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Suppose you make jewellery. If the price of silver increases, what would we expect you to do?

Correct AnswerverifiedShow Answer

The behaviour of buyers and sellers drives markets toward equilibrium.

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Market demand is given as QD = 40 - 2P. Market supply is given as QS = 2P. If price increases from $15 to $16, what is the price elasticity of demand?

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Market demand is given as QD = 75 - P. Market supply is given as QS = 3P + 15. If price increases from $48 to $54, what is the price elasticity of demand?

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Which of the following demonstrates the law of demand?

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Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

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Which of the following might be the reason when quantity demanded has decreased at every price?

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-Refer to the Table 4-1. If the price were $3, what would happen?

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Market demand is given as QD = 300 - 6P. Market supply is given as QS = 4P. If price increases from $35 to $38, what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

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