Question
Indicate whether the statement is true or false. 1.The market demand curve for a given product may be downward sloping even if no person in
Indicate whether the statement is true or false.
1.The market demand curve for a given product may be downward sloping even if no person in that market has a downward sloping demand curve.
a.
True
b.
False
2.Another term forexcess supplyisshortage.
a.
True
b.
False
3.As long as the maximum buying price of a good is less than the minimum selling price of that good, an exchange will occur.
a.
True
b.
False
4.In general, all markets equilibrate at the same speed.
a.
True
b.
False
5.Supply curves are usually upward sloping.
a.
True
b.
False
6.The termsscarcityandshortageare synonyms.
a.
True
b.
False
7.Consumers' surplus is the difference between the maximum price the buyer is willing and able to pay for a good and the actual price paid.
a.
True
b.
False
8.To an economist, an increase in demand means the same thing as an increase in quantity demanded.
a.
True
b.
False
9.If the government increased licensing requirements for beauty salons, the supply curve for salon services would shift to the left.
a.
True
b.
False
10.On the basis of the law of demand, it is more likely that a person will lose his temper when the price of losing his temper is low than when it is high.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
Exhibit 3-3
Good Y
11.Refer to Exhibit 3-3. A movement from point W to point Z would have been the result of
a.
a reduction in the price of good Y.
b.
an increase in the number of buyers in the area where good Y is being sold.
c.
a decrease in business taxes paid by the producers of good Y.
d.
a decrease in the number of buyers in the area where good Y is being sold.
e.
an increase in the price of good Y.
Exhibit 3-10
12.Refer to Exhibit 3-10. A price of $20 is
a.
the equilibrium price of good X.
b.
a price at which there is a surplus of good X.
c.
a price at which there is a shortage of good X.
d.
not a possible price for good X.
Exhibit 3-8
13.Refer to Exhibit 3-8. A surplus exists at any price above
a.
$2.00.
b.
$4.50.
c.
$4.00.
d.
$3.50.
e.
$3.00.
14.One reason that helps to explain the law of demand is the law of
a.
diminishing marginal utility.
b.
diminishing marginal returns.
c.
increasing opportunity costs.
d.
supply.
15.Which of the following statements isfalse?
a.
An upward-sloping supply curve graphically represents the law of supply.
b.
A vertical supply curve graphically represents the law of supply.
c.
If income rises and good X is a normal good, then the demand for good X will rise.
d.
If income falls and good Y is an inferior good, then the demand for good Y will rise.
16.Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,
a.
the supply curve of new houses would shift leftward, since it now costs $10,000 more for builders to produce a house.
b.
the demand curve for new houses would shift rightward, since now every family would want to buy a house.
c.
the demand curve for new houses would shift leftward.
d.
the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.
Exhibit 3-5
17.Refer to Exhibit 3-5.In the market shown, if equilibrium was originally at point V and is now at point Z, the new equilibrium price is __________ it was originally and the new equilibrium quantity is ____________ it was originally.
a.
greater than; greater than
b.
less than; greater than
c.
greater than; less than
d.
less than; less than
18.If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen?
a.
The demand curve for the product the firm produces shifts rightward.
b.
The demand curve for the product the firm produces shifts leftward.
c.
The supply curve of the product the firm produces shifts rightward.
d.
The supply curve of the product the firm produces shifts leftward.
Exhibit 3-4
19.Refer to Exhibit 3-4. If this is a competitive market, price and quantity will gravitate toward
a.
$6 and 10 units, respectively.
b.
$6 and 20 units, respectively.
c.
$4 and 15 units, respectively.
d.
$2 and 15 units, respectively.
Exhibit 3-12
---------------------------------------------------Quantity Supplied --------------------------------------------
Price
Aline
Bentley
Calvin
Daniel
Market
$6
22
20
6
0
(A)
7
24
22
10
5
(B)
8
26
24
13
10
(C)
9
30
26
17
15
(D)
10
35
28
22
20
(E)
11
50
30
32
30
(F)
Assume that Aline, Bentley, Calvin, and Daniel are the only sellers in this market.
20.Refer to Exhibit 3-12.Fill in blanks (A) and (B) respectively with the market quantity supplied at each given price.
a.
12.25; 14.75
b.
49; 59
c.
48; 61
d.
8.00; 8.71
Exhibit 3-16
21.Refer to Exhibit 3-16. If there are empty seats for a basketball game at the price P*, the situation is best depicted on graph
a.
(1), with P* = P1.
b.
(2), with P* = P3.
c.
(3), with P* = P2.
d.
(3), with P* = P3.
e.
(4), with P* = P1.
22.Suppose that good X is one of the more heavily subsidized industries in the United States. Suppose further that as a result of intense lobbying from health-related concerns, Congress repeals the subsidies on good X. Which of the following scenarios would likely occur?
a.
The supply curve for good X would shift rightward, as it would now be cheaper to produce each level of output.
b.
The supply curve for good X would shift leftward, since it would now cost more to produce each level of output.
c.
There would be no shift in the supply curve for good X; subsidies don't affect output.
d.
There would be a movement along the supply curve for good X, but the supply curve would not shift.
23.On a supply-and-demand diagram, equilibrium is found
a.
where the supply curve intercepts the vertical axis.
b.
where the demand curve intercepts the horizontal axis.
c.
where the demand and supply curves intersect.
d.
at every point on either curve
Exhibit 3-9
24.Refer to Exhibit 3-9. Consumers view X and Y as substitutes. If the price of Y increases as a result of a decrease in the supply of Y, an economist would expect a movement in the market for X from
a.
F to E.
b.
A to B.
c.
E to F.
d.
B to A.
25.If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity?
a.
The price will increase, but the quantity may increase or decrease.
b.
The price will increase, and the quantity will increase.
c.
The price will decrease, and the quantity will increase.
d.
The price will stay the same, but the quantity will increase.
e.
The price will stay the same, but the quantity will decrease.
1.Define or explain the following terms with examples and graphs:elastic demand, inelastic demand, unit elastic demand, perfectly elastic, and perfectly inelastic. Use a graph to show and explain the relationship between elasticity and total revenue.
2If your income is $50, and the prices of A, B, and C are $4, $3, and $2 respectively, what quantities of each product will you purchase to maximize utility?
MU (A)MU(B)MU (C)
1454025
2402421
3321515
4241210
5666
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Introduction to Econometrics
Authors: James H. Stock, Mark W. Watson
3rd edition
133595420, 978-0138009007, 138009007, 978-0133486872, 133486877, 978-0133595420
