Question 1

Holding all else constant,what will result from a higher price for ski-lift tickets?

Accepted Answer

A)   increased number of skiers
B)   decreased supply of ski resorts
C)   decreased demand for other winter recreational activities
D)   decreased ski salesE) A) and B)
F) A) and C)

Question 2

Market demand is given as QD = 250 - 0.5P.Market supply is given as QS = 2P.If price increases from $50 to $55,what is the price elasticity of demand?

Accepted Answer

A)   0
B)   0.1
C)   1.0
D)   2.2E) A) and B)
F) B) and C)

Question 3

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

A)   similar products
B)   numerous sellers
C)   market power
D)   numerous buyersE) C) and D)
F) B) and D)

Question 4

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) A) and C)
F) A) and D)

Question 5

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly (a complementary good) increased,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you?

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) A) and B)
F) A) and C)

Question 6

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) A) and B)
F) None of the above

Question 7

You love.You hear on the news that 50% of the world's banana crop has been wiped out because of a virus,which will cause the price to double by the end of the year.What happens as a result?

Accepted Answer

A)   Your demand for bananas will increase at the end of the year.
B)   Your demand for bananas increases today.
C)   Your demand for bananas falls as you look for a substitute good.
D)   Your demand for bananas falls because the price increases today.E) A) and B)
F) A) and C)

Question 8

Who or what allocates an economy's scarce resources?

Accepted Answer

A)   economic planners
B)   producers who use resources
C)   prices for resources
D)   government regulation of scarce resourcesE) A) and B)
F) A) and C)

Question 9

To find the market demand for a product,how are individual demand curves summed?

Accepted Answer

A)   vertically
B)   diagonally
C)   horizontally
D)   by averagingE) A) and D)
F) B) and D)

Question 10

If the demand for a good falls when income falls,the good is called an inferior good.

Accepted Answer

A) True 
 B)False

Question 11

Figure 4-10 
-Refer to the Figure 4-10.What is the movement from point B to point A on the graph called?

Accepted Answer

A)   a decrease in supply
B)   an increase in supply
C)   an increase in the quantity supplied
D)   a decrease in the quantity suppliedE) All of the above
F) B) and C)

Question 12

Market demand is given as QD = 140 - 5P.Market supply is given as QS = 2P.If price increases from $25 to $27,what is the price elasticity of demand?

Accepted Answer

A)   0.013
B)   0.13
C)   1.3
D)   13.0E) A) and B)
F) A) and C)

Question 13

What is an example of a perfectly competitive market?

Accepted Answer

A)   cable TV market
B)   soybean market
C)   tablet market
D)   running shoe marketE) C) and D)
F) B) and D)

Question 14

What are the roles of buyers and sellers in a perfectly competitive market?

Accepted Answer

A)   Buyers determine supply and sellers determine demand.
B)   Buyers determine demand and sellers determine supply.
C)   Buyers and sellers as one group determine supply.
D)   Buyers and sellers as one group determine demand.E) C) and D)
F) A) and B)

Question 15

Market demand is given as QD = 100 - P.Market supply is given as QS = 4P.If price increases from $70 to $74,what is the price elasticity of demand?

Accepted Answer

A)   0.4
B)   0.7
C)   2.57
D)   3.5E) A) and C)
F) C) and D)

Question 16

If Francis receives an increase in his pay,what would we expect?

Accepted Answer

A)   Francis's demand for each good he purchases to remain unchanged
B)   Francis's demand for normal goods to decrease
C)   Francis's demand for luxury goods to increase
D)   Francis's demand for inferior goods to increaseE) B) and D)
F) B) and C)

Question 17

What is the law of demand?

Accepted Answer

A)   When the price of a good falls,buyers respond by purchasing more.
B)   When income levels increase,buyers respond by purchasing more.
C)   When buyers' tastes for the good increase,they purchase more of the good.
D)   When the price of a good or service rises,buyers respond by purchasing more.E) A) and C)
F) B) and C)

Question 18

Which best describes the relationship shown by a demand table?

Accepted Answer

A)   the price of a good and the quantity supplied
B)   income and the quantity of the good demanded
C)   the price of a good and the quantity buyers are willing and able to purchase
D)   the number of buyers and the quantity demandedE) C) and D)
F) B) and C)

Question 19

What will happen to the demand curve for ice cream in a very hot summer in Guelph?

Accepted Answer

A)   It will shift to the left.
B)   It will shift to the right.
C)   It will remain stable but we would move down the curve.
D)   It will remain stable but we would move up the curve.E) None of the above
F) C) and D)

Question 20

What does the law of demand imply?

Accepted Answer

A)   price and quantity supplied are inversely related
B)   price and quantity demanded are inversely related
C)   price and quantity demanded are positively related
D)   price and quantity supplied are positively relatedE) A) and C)
F) All of the above

Exam 4: The Market Forces of Supply and Demand

Market demand is given as QD = 250 - 0.5P.Market supply is given as QS = 2P.If price increases from $50 to $55,what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

If Francis receives an increase in his pay,what would we expect?

Correct AnswerverifiedShow Answer

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up,the price of jelly (a complementary good) increased,fewer firms decided to produce peanut butter,and health officials announced that eating peanut butter was bad for you?

Correct AnswerverifiedShow Answer

Figure 4-10 -Refer to the Figure 4-10.What is the movement from point B to point A on the graph called?

Correct AnswerverifiedShow Answer

What does the law of demand imply?

Correct AnswerverifiedShow Answer

You love.You hear on the news that 50% of the world's banana crop has been wiped out because of a virus,which will cause the price to double by the end of the year.What happens as a result?

Correct AnswerverifiedShow Answer

Market demand is given as QD = 100 - P.Market supply is given as QS = 4P.If price increases from $70 to $74,what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

Holding all else constant,what will result from a higher price for ski-lift tickets?

Correct AnswerverifiedShow Answer

Which of the following demonstrates the law of demand?

Correct AnswerverifiedShow Answer

What is an example of a perfectly competitive market?

Correct AnswerverifiedShow Answer

Who or what allocates an economy's scarce resources?

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?

Correct AnswerverifiedShow Answer

Which best describes the relationship shown by a demand table?

Correct AnswerverifiedShow Answer

What are the roles of buyers and sellers in a perfectly competitive market?

Correct AnswerverifiedShow Answer

If the demand for a good falls when income falls,the good is called an inferior good.

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of a perfectly competitive market?

Correct AnswerverifiedShow Answer

Market demand is given as QD = 140 - 5P.Market supply is given as QS = 2P.If price increases from $25 to $27,what is the price elasticity of demand?

Correct AnswerverifiedShow Answer

What will happen to the demand curve for ice cream in a very hot summer in Guelph?

Correct AnswerverifiedShow Answer

What is the law of demand?

Correct AnswerverifiedShow Answer

To find the market demand for a product,how are individual demand curves summed?

Correct AnswerverifiedShow Answer

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