Question 1

Suppose that firm A obtained a patent for a new medication that cures certain types of cancer.Which assumption of the supply-and-demand model does not hold in this example?

Accepted Answer

A)   Everyone is a price taker.
B)   Products are homogeneous.
C)   Trading costs are low.
D)   Everyone has full information about the price and quality of goods.

Question 2

Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

Accepted Answer

A) True 
 B)False

Question 3

One of the biggest benefits of the Internet auction site eBay

Accepted Answer

A)   is its control over prices.
B)   is that it increases the supply of products.
C)   is that it increases the demand for products.
D)   is that it reduces transaction costs for both sellers and buyers.

Question 4

Assuming plasma TVs are a normal good,an increase in consumer incomes will lead to

Accepted Answer

A)   a rightward shift of the demand curve for plasma TVs.
B)   a movement upward along the demand curve for plasma TVs.
C)   a rightward shift of the supply curve for plasma TVs.
D)   no change of the demand curve for plasma TVs.

Question 5

If on Tuesday the perceived price of studying for an exam is $4 per hour but on Saturday the perceived price of studying for an exam is $10,the law of demand predicts

Accepted Answer

A)   more studying on Saturday and less on Tuesday.
B)   more studying on Tuesday and less on Saturday.
C)   the same amount of studying on Tuesday and Saturday.
D)   no studying on Tuesday or Saturday.

Question 6

Which of the following would NOT change demand?

Accepted Answer

A)   the price of the product
B)   information about the product's health effects
C)   the income of the consumers
D)   the price of related products

Question 7

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be demanded unless price is less than

Accepted Answer

A)   $0.
B)   $5.
C)   $12.
D)   $14.

Question 8

If ethanol production is expected to increase the price of corn,U.S.farmers will likely

Accepted Answer

A)   shift the supply of corn to the left.
B)   shift the supply of corn to the right.
C)   reduce the production of corn by sliding down the corn supply curve, all else equal.
D)   increase the production of corn by sliding up the corn supply curve, all else equal.

Question 9

At equilibrium,quantity sold equals the quantity bought.This implies that

Accepted Answer

A)   to sell more, producers require more in payment than consumers are willing to pay.
B)   government regulation is necessary.
C)   to sell less would require a lower price but would yield greater profit.
D)   those who don't buy have been treated unfairly.

Question 10

If the demand curve is vertical a rightward shift of the supply curve will lead to

Accepted Answer

A)   an increase in quantity supplied.
B)   an increase in quantity demanded.
C)   a decrease in quantity demanded.
D)   a decrease in price.

Question 11

Supply curves

Accepted Answer

A)   slope upward.
B)   slope downward.
C)   are horizontal.
D)   can have many shapes.

Question 12

If the price of automobiles were to increase substantially,the demand curve for gasoline would most likely

Accepted Answer

A)   shift leftward.
B)   shift rightward.
C)   remain unchanged.
D)   become steeper.

Question 13

If the price of gasoline were $5,many people would stop buying gasoline while others would continue to do so.This would indicate

Accepted Answer

A)   those who are buying gasoline value it at least $5 per gallon.
B)   those who are not buying gasoline value it more than $5 per gallon.
C)   only those who are extremely wealthy are buying gasoline.
D)   the price of gasoline needs to be regulated by the Federal Government.

Question 14

During the winter of 1997-1998,the northeastern United States experienced warmer than usual conditions.The price of home heating oil was less than it was during the previous winter,but people bought less home heating oil.This contradicts the Law of Demand.

Accepted Answer

A) True 
 B)False

Question 15

Consumer groups tend to lobby for

Accepted Answer

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

Question 16

If the price is $5 and the quantity demanded is 100 units,then at a price of $10,the quantity demanded will be

Accepted Answer

A)   less than or equal to 100 units.
B)   greater than or equal to 100 units.
C)   less than or equal to 1000 units.
D)   equal to 100 units.

Question 17

Government actions can cause a

Accepted Answer

A)   shift in the supply curve.
B)   shift in the demand curve.
C)   reaction from firms in other countries.
D)   All of the above.

Question 18

If two firms produce the same product but have different supply curves,

Accepted Answer

A)   this would indicate that some other variable differs across the two firms.
B)   this would indicate that all variables are the same across the two firms.
C)   this would indicate that one or both of the firm's managers are misinformed.
D)   this would indicate a need for government regulation.

Question 19

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 most likely will not 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.

Question 20

Import quotas on steel tend to result in higher quantities of steel being sold at lower prices than would be observed in the absence of a quota.

Accepted Answer

A) True 
 B)False

Exam 2: Supply and Demand

If on Tuesday the perceived price of studying for an exam is $4 per hour but on Saturday the perceived price of studying for an exam is $10,the law of demand predicts

Correct AnswerverifiedShow Answer

If two firms produce the same product but have different supply curves,

Correct AnswerverifiedShow Answer

If the demand curve is vertical a rightward shift of the supply curve will lead to

Correct AnswerverifiedShow Answer

At equilibrium,quantity sold equals the quantity bought.This implies that

Correct AnswerverifiedShow Answer

Which of the following would NOT change demand?

Correct AnswerverifiedShow Answer

If the price of automobiles were to increase substantially,the demand curve for gasoline would most likely

Correct AnswerverifiedShow Answer

If the price is $5 and the quantity demanded is 100 units,then at a price of $10,the quantity demanded will be

Correct AnswerverifiedShow Answer

Suppose that firm A obtained a patent for a new medication that cures certain types of cancer.Which assumption of the supply-and-demand model does not hold in this example?

Correct AnswerverifiedShow Answer

Import quotas on steel tend to result in higher quantities of steel being sold at lower prices than would be observed in the absence of a quota.

Correct AnswerverifiedShow Answer

If ethanol production is expected to increase the price of corn,U.S.farmers will likely

Correct AnswerverifiedShow Answer

Assuming plasma TVs are a normal good,an increase in consumer incomes will lead to

Correct AnswerverifiedShow Answer

If the price of gasoline were $5,many people would stop buying gasoline while others would continue to do so.This would indicate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Government actions can cause a

Correct AnswerverifiedShow Answer

-The above figure shows a graph of the market for pizzas in a large town.No pizzas will be demanded unless price is less than

Correct AnswerverifiedShow Answer

One of the biggest benefits of the Internet auction site eBay

Correct AnswerverifiedShow Answer

Consumer groups tend to lobby for

Correct AnswerverifiedShow Answer

During the winter of 1997-1998,the northeastern United States experienced warmer than usual conditions.The price of home heating oil was less than it was during the previous winter,but people bought less home heating oil.This contradicts the Law of Demand.

Correct AnswerverifiedShow Answer

Supply curves

Correct AnswerverifiedShow Answer

Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs,demand curves do not slope downward for pain-relieving drugs.

Correct AnswerverifiedShow Answer

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