Question 1

If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Accepted Answer

A)   $10 and 4 units
B)   $10 and 8 units
C)   $6 and 4 units
D)   $6 and 8 units
E)   $10 and 2 units

Question 2

Compare and contrast the differences between a competitive market and an imperfect market, and give an example of an imperfect market.

Accepted Answer

A competitive market is where there are ...

Question 3

The difference between a tax and a subsidy is that when the government places a tax on a good, it _________ the equilibrium price and _________ the equilibrium quantity, whereas when the government places a subsidy on a good, it _________ the equilibrium price and _________ the equilibrium quantity.

Accepted Answer

A)   increases; decreases; decreases; increases
B)   increases; increases; decreases; decreases
C)   decreases; decreases; increases; increases
D)   decreases; increases; increases; decreases
E)   increases; does not change; does not change; increases

Question 4

What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?

Accepted Answer

A)   The equilibrium price will go up and the equilibrium quantity will go up.
B)   The equilibrium price will be indeterminate and the equilibrium quantity will go up.
C)   The equilibrium price will go down and the equilibrium quantity will be indeterminate.
D)   The equilibrium price will be indeterminate and the equilibrium quantity will go down.
E)   The equilibrium price will go up and the equilibrium quantity will be indeterminate.

Question 5

You are given the following supply schedule: $$\begin{array} { | l | l | } 
\hline \text { Price } & \text { Quantity Supplied } \
\hline \$ 0 & 0 \
\hline \$ 4 & 15 \
\hline \$ 5 & 30 \
\hline \$ 12 & 45 \
\hline \$ 16 & 60 \
\hline
\end{array}$$

a. What happened to the supply curve?
b. List five things that could make the supply curve reflect your answer in part

Accepted Answer

a. The supply curve shifted to the left....

Question 6

You are given the following equations where P is price and Q is quantity:
Equation 1: P = 300 - 10Q Equation 2: P = 5Q
a. Which equation represents the demand curve? Why?
b. What is the equilibrium price and equilibrium quantity?
c. At a price of $150, is there a shortage, surplus, or neither? If there is a shortage or surplus, what is the amount of that shortage or surplus?

Accepted Answer

a. Equation 1 represents the demand curv...

Question 7

There is a competitive market for dog treats in Earltown. What would happen to the equilibrium price and quantity of dog treats if a study showing that treats improve your dog's behavior is published at the same time that two of the main dog-treat distributors shut down? Use a supply and demand graph in your analysis.

Accepted Answer

As shown in the accompanying diagram, th...

Question 8

Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?

Accepted Answer

A)   changes in income
B)   the price of related goods
C)   changes in tastes and preferences
D)   the number of buyers
E)   expectations regarding the future price

Question 9

Consider the following demand schedules for New York Mets T-shirts:   Price  Quantity Demanded $5.00200$10.00175$12.00150$14.00100$16.0050\begin{array} { | l | l | } \hline 	ext { Price } & 	ext { Quantity Demanded } \\hline \$ 5.00 & 200 \\hline \$ 10.00 & 175 \\hline \$ 12.00 & 150 \\hline \$ 14.00 & 100 \\hline \$ 16.00 & 50 \\hline\end{array} Price $5.00$10.00$12.00$14.00$16.00​ Quantity Demanded 20017515010050​​  Holding all else constant, which of the following demand schedules is most likely to represent New York Mets T-shirts if they win the World Series?

Accepted Answer

A)     Price  Quantity Demanded $8.00200$10.00175$12.00150$14.00100$16.0050\begin{array} { | l | l | } \hline 	ext { Price } & 	ext { Quantity Demanded } \\hline \$ 8.00 & 200 \\hline \$ 10.00 & 175 \\hline \$ 12.00 & 150 \\hline \$ 14.00 & 100 \\hline \$ 16.00 & 50 \\hline\end{array} Price $8.00$10.00$12.00$14.00$16.00​ Quantity Demanded 20017515010050​​ 
B)     Price  Quantity Demanded $8.00175$10.00150$12.00125$14.0075$16.0025\begin{array} { | l | l | } \hline 	ext { Price } & 	ext { Quantity Demanded } \\hline \$ 8.00 & 175 \\hline \$ 10.00 & 150 \\hline \$ 12.00 & 125 \\hline \$ 14.00 & 75 \\hline \$ 16.00 & 25 \\hline\end{array} Price $8.00$10.00$12.00$14.00$16.00​ Quantity Demanded 1751501257525​​ 
C)     Price  Quantity Demanded $8.00250$10.00175$12.00100$14.00100$16.00100\begin{array} { | l | l | } \hline 	ext { Price } & 	ext { Quantity Demanded } \\hline \$ 8.00 & 250 \\hline \$ 10.00 & 175 \\hline \$ 12.00 & 100 \\hline \$ 14.00 & 100 \\hline \$ 16.00 & 100 \\hline\end{array} Price $8.00$10.00$12.00$14.00$16.00​ Quantity Demanded 250175100100100​​ 
D)     Price  Quantity Demanded $$.00250$10.00200$12.00175$14.00150$16.00100\begin{array} { | l | l | } \hline 	ext { Price } & 	ext { Quantity Demanded } \\hline \$ \$ .00 & 250 \\hline \$ 10.00 & 200 \\hline \$ 12.00 & 175 \\hline \$ 14.00 & 150 \\hline \$ 16.00 & 100 \\hline\end{array} Price $$.00$10.00$12.00$14.00$16.00​ Quantity Demanded 250200175150100​​ 
E)     Price  Quantity Demanded $$.0050$10.00100$12.00150$14.00175$16.00200\begin{array} { | l | l | } \hline 	ext { Price } & 	ext { Quantity Demanded } \\hline \$ \$ .00 & 50 \\hline \$ 10.00 & 100 \\hline \$ 12.00 & 150 \\hline \$ 14.00 & 175 \\hline \$ 16.00 & 200 \\hline\end{array} Price $$.00$10.00$12.00$14.00$16.00​ Quantity Demanded 50100150175200​​

Question 10

Refer to the table below. The equilibrium price and quantity in this market is:   Price  Quantity  Demanded  Quantity  Supplied $10.0010100$$.002080$6.003060$4.004040$2.005020$0.00600\begin{array} { | l | l | l | } \hline 	ext { Price } & \begin{array} { l } 	ext { Quantity } \	ext { Demanded }\end{array} & \begin{array} { l } 	ext { Quantity } \	ext { Supplied }\end{array} \\hline \$ 10.00 & 10 & 100 \\hline \$ \$ .00 & 20 & 80 \\hline \$ 6.00 & 30 & 60 \\hline \$ 4.00 & 40 & 40 \\hline \$ 2.00 & 50 & 20 \\hline \$ 0.00 & 60 & 0 \\hline\end{array} Price $10.00$$.00$6.00$4.00$2.00$0.00​ Quantity  Demanded ​102030405060​ Quantity  Supplied ​100806040200​​

Accepted Answer

A)   $4.00 and 40 units.
B)   $4.00 and 80 units.
C)   $2.00 and 50 units.
D)   $2.00 and 60 units.
E)   $8.00 and 40 units.

Question 11

Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?

Accepted Answer

A)   The equilibrium price will go up and equilibrium quantity will go up.
B)   The equilibrium price will be indeterminate and equilibrium quantity will go up.
C)   The equilibrium price will go down and equilibrium quantity will be indeterminate.
D)   The equilibrium price will go up and equilibrium quantity will be indeterminate.
E)   The equilibrium price will be indeterminate and equilibrium quantity will go down.

Question 12

Higher input costs:

Accepted Answer

A)   reduce profits.
B)   increase profits.
C)   shift the demand curve.
D)   always happen during a recession.
E)   provide an incentive to hire more workers.

Question 13

Something is an inferior good if the demand for the good:

Accepted Answer

A)   increases as the consumer's income increases.
B)   increases as the consumer's income decreases.
C)   decreases as the price of a complement increases.
D)   decreases as the price of a substitute increases.
E)   decreases as the consumer's income decreases.

Question 14

If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.

Accepted Answer

A)   increase; increase.
B)   increase; decrease.
C)   decrease; decrease.
D)   decrease; increase.
E)   remain the same; remain the same.

Question 15

According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:

Accepted Answer

A)   equilibrium price of apples to increase and the equilibrium quantity of apples in the market to decrease.
B)   equilibrium price of apples to be indeterminate and the equilibrium quantity of apples in the market to increase.
C)   equilibrium quantity of apples in the market to be indeterminate and the equilibrium price of apples to increase.
D)   equilibrium quantity of apples in the market to decrease and the equilibrium price of apples to stay the same.
E)   equilibrium quantity of apples in the market to decrease and the equilibrium price of apples to be indeterminate.

Question 16

Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?

Accepted Answer

A)   The equilibrium price goes up and equilibrium quantity goes up.
B)   The equilibrium price is indeterminate and equilibrium quantity goes up.
C)   The equilibrium price goes down and equilibrium quantity is indeterminate.
D)   The equilibrium price is indeterminate and equilibrium quantity goes down.
E)   The equilibrium price goes up and equilibrium quantity is indeterminate.

Question 17

Please use the following supply and demand schedules to answer the questions below: $$\begin{array} { | l | l | l | } 
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 0 & 25 & 0 \
\hline \$ 5 & 15 & 5 \
\hline \$ 10 & 10 & 10 \
\hline \$ 15 & 5 & 20 \
\hline \$ 20 & 0 & 30 \
\hline
\end{array}$$ 
a. At what prices will we see a shortage?
b. At what prices will we see a surplus?
c. What is the equilibrium price and quantity for this market?

Accepted Answer

a. At all prices below $10, we...

Question 18

If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Accepted Answer

A)   $10 and 4 units
B)   $10 and 8 units
C)   $6 and 4 units
D)   $6 and 8 units
E)   $10 and 2 units

Question 19

Please use the accompanying graph to answer the questions.
a. What is the equilibrium price and equilibrium quantity?
b. At the price of $5, is there a shortage or a surplus? What is the amount of this shortage or surplus?
c. At the price of $15, is there a shortage or a surplus? What is the amount of this shortage or surplus?

Accepted Answer

a. The equilibrium price and equilibrium...

Question 20

Firm A notices that Firm B is making a profit by producing footballs. There is nothing stopping Firm A from entering the football market, so it does. Holding all else constant, the number of firms in the market will:

Accepted Answer

A)   increase, causing demand to increase.
B)   increase. causing the supply to shift up.
C)   decrease, causing the supply to decrease.
D)   decrease, causing the supply to increase.
E)   increase, causing the supply to increase.

Exam 3: The Market at Work: Supply and Demand

Compare and contrast the differences between a competitive market and an imperfect market, and give an example of an imperfect market.

Correct Answer
verified
A competitive market is where there are ...
View Answer

If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _ and the equilibrium quantity to _, holding all else constant.

Correct Answer
verified

Correct Answer
verified

According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:

Correct Answer
verified

Correct Answer
verified
a. At all prices below $10, we...
View Answer

Something is an inferior good if the demand for the good:

Correct Answer
verified

If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Correct Answer
verified

Higher input costs:

Correct Answer
verified

What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?

Correct Answer
verified

If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Correct Answer
verified

Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?

Correct Answer
verified

Correct Answer
verified
As shown in the accompanying diagram, th...
View Answer

Firm A notices that Firm B is making a profit by producing footballs. There is nothing stopping Firm A from entering the football market, so it does. Holding all else constant, the number of firms in the market will:

Correct Answer
verified

Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?

Correct Answer
verified

Correct Answer
verified
a. Equation 1 represents the demand curv...
View Answer

Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?

Correct Answer
verified

The difference between a tax and a subsidy is that when the government places a tax on a good, it _____ the equilibrium price and _ the equilibrium quantity, whereas when the government places a subsidy on a good, it _ the equilibrium price and _____ the equilibrium quantity.

Correct Answer
verified

Correct Answer
verified
a. The supply curve shifted to the left....
View Answer

Correct Answer
verified
a. The equilibrium price and equilibrium...
View Answer

Correct Answer
verified

Exam 3: The Market at Work: Supply and Demand

Compare and contrast the differences between a competitive market and an imperfect market, and give an example of an imperfect market.

Correct AnswerverifiedA competitive market is where there are ...View AnswerShow Answer

If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _________ and the equilibrium quantity to _________, holding all else constant.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to a supply and demand model for apples, if the average household income decreases at the same time ten apple orchards go out of business, one would expect the:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. At all prices below $10, we...View AnswerShow Answer

Something is an inferior good if the demand for the good:

Correct AnswerverifiedShow Answer

If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Correct AnswerverifiedShow Answer

Higher input costs:

Correct AnswerverifiedShow Answer

What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?

Correct AnswerverifiedShow Answer

If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?

Correct AnswerverifiedShow Answer

Many consumer items eventually go out of style, and because fewer people want these items, demand for them drops. When this happens, we usually see production of these items stop. What happens to the equilibrium price and equilibrium quantity in a market like this?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAs shown in the accompanying diagram, th...View AnswerShow Answer

Firm A notices that Firm B is making a profit by producing footballs. There is nothing stopping Firm A from entering the football market, so it does. Holding all else constant, the number of firms in the market will:

Correct AnswerverifiedShow Answer

Companies use advertising to shift consumer demand. Which of the following demand shifters do you think advertisers most often rely on?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Equation 1 represents the demand curv...View AnswerShow Answer

Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if income increases and the cost of labor to produce shoes increases?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The supply curve shifted to the left....View AnswerShow Answer

Correct Answerverifieda. The equilibrium price and equilibrium...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
A competitive market is where there are ...
View Answer

If the number of buyers in a market increases from 50 to 100, you would expect the equilibrium price to _ and the equilibrium quantity to _, holding all else constant.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. At all prices below $10, we...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
As shown in the accompanying diagram, th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. Equation 1 represents the demand curv...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. The supply curve shifted to the left....
View Answer

Correct Answer
verified
a. The equilibrium price and equilibrium...
View Answer

Correct Answer
verified