Question 1

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price floor of $50 per ton. What would be the resulting market distortion?

Accepted Answer

A)  Shortage of 120 tons of fish
B)  Shortage of 175 tons of fish
C)  Surplus of 120 tons of fish
D)  There would be no market distortion

Question 2

An increase in quantity and an indeterminate change in price are consistent with a:

Accepted Answer

A)  leftward shift in demand and supply.
B)  rightward shift in supply and demand.
C)  rightward shift in supply, keeping demand constant.
D)  rightward shift in demand, keeping supply constant.

Question 3

Refer to the following graph.  Which of the following pairs of equations describes the supply and demand curves?

Accepted Answer

A)  Qs = 0.4P + 10; Qd =30 + P, respectively
B)  Qs = 0.4P + 10; Qd =30, respectively
C)  Qs = 2.5P − 25; P = 30 + P, respectively
D)  Qs = 2.5P − 25; P = 30, respectively

Question 4

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

Accepted Answer

A)  upward and the price will increase by $5.
B)  upward and the price will increase by less than $5.
C)  downward and the price will decrease by $5.
D)  downward and the price will decrease by less than $5.

Question 5

When people heard that there was a shortage of specialty dolls, they wanted even more of them. Because of this effect the pressure on the price of these dolls increased. The price of the dolls remained the same however. Thus, the shortage of these dolls:

Accepted Answer

A)  increased.
B)  decreased.
C)  did not change.
D)  may have increased or decreased.

Question 6

Which of the following pairs of equations describes the supply and demand curves given in the accompanying demand and supply tables?   Price  Quantity Supplied  Quantity Demanded $003$102$211$320$430$540\begin{array} { | c | c | c | } \hline 	ext { Price } & 	ext { Quantity Supplied } & 	ext { Quantity Demanded } \\hline \$ 0 & 0 & 3 \\hline \$ 1 & 0 & 2 \\hline \$ 2 & 1 & 1 \\hline \$ 3 & 2 & 0 \\hline \$ 4 & 3 & 0 \\hline \$ 5 & 4 & 0 \\hline\end{array} Price $0$1$2$3$4$5​ Quantity Supplied 001234​ Quantity Demanded 321000​​

Accepted Answer

A)  Qs = 1; Qd = 1 ? 3P, respectively
B)  Qs = P; Qd = 3 ? 3P, respectively
C)  Qs = P + 1; Qd = 3 ? P, respectively
D)  Qs = P ? 1; Qd = 3 ? P, respectively

Question 7

Refer to the following graph.  Demand and supply are initially D and S1, respectively. Which of the following best describes the effect of a $0.50 per pound tariff on Danish hams imported into the United States?

Accepted Answer

A)  Supply shifts from S1 to S2; quantity sold rises to 100 thousand pounds and price paid by consumers declines to $1.75 a pound
B)  Neither supply nor demand shift, but price paid by consumers declines to $1.50 a pound while quantity sold remains at 80 thousand pounds
C)  Supply shifts from S1 to S0; quantity sold declines to 60 thousand pounds and price paid by consumers rises to $2.50 a pound
D)  Supply shifts from S1 to S0; quantity sold declines to 60 thousand pounds and price paid by consumers rises to $2.25 a pound

Question 8

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What is the cost of this program to the third-party if a $2 co-pay is established?

Accepted Answer

A)  $270
B)  $240
C)  $180
D)  $120

Question 9

Refer to the following graphs.  A recent report indicates that the device known as the right heart catheter used to diagnose heart conditions poses more risks than previously thought. The effect of the report on the market for right heart catheters is best shown by which of the graphs?

Accepted Answer

A)  I
B)  II
C)  III
D)  IV

Question 10

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. If a minimum wage is set at $4.00 (W = 4) , then:

Accepted Answer

A)  15 workers will be supplied and demanded.
B)  20 workers will be supplied and demanded.
C)  20 workers will be supplied, but only 10 workers will be demanded.
D)  10 workers will be supplied, but 20 workers will be demanded.

Question 11

Refer to the following graph.  Which price will create the greatest shortage?

Accepted Answer

A)  P0
B)  P1
C)  P2
D)  P3

Question 12

After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside OPEC. OPEC during this time was unable to restrain output among members in its effort to lift oil prices. What best describes these events?

Accepted Answer

A)  The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left.
B)  The rise in demand shifted the demand for oil to the right. As price rose, supply of oil also rose.
C)  The rise in demand shifted the demand for oil to the right. As price rose, quantity of oil supplied rose.
D)  The rise in demand reflects a movement down along the demand curve as supply shifted to the right when suppliers produced more oil.

Question 13

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the total market expenditures on prescription drugs?

Accepted Answer

A)  $30
B)  $90
C)  $270
D)  $540

Question 14

The invention of a machine that increases milk production is discovered. If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

Accepted Answer

A)  Excess demand for milk
B)  Excess supply of milk
C)  Neither a shortage nor a surplus of milk
D)  A decline in the price of milk

Question 15

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Accepted Answer

A) True 
 B)False

Question 16

When the polio vaccine first became available in the United States, the government controlled the price with an effective price ceiling. Production of the vaccine was not sufficient to fill all orders and the government had to regulate its distribution. Had the vaccine been sold without government intervention, the shortage would have been eliminated by price:

Accepted Answer

A)  falling, quantity demanded decreasing, and supply increasing.
B)  falling, demand decreasing, and supply increasing.
C)  rising, demand decreasing, and quantity supplied increasing.
D)  rising, quantity demanded decreasing, and quantity supplied increasing.

Question 17

In the late 1990s "mad cow" disease caused people to buy less beef. It also caused the EU to ban imported British beef and the British government to ban the sale of older cattle. What is the effect of the following on price and quantity of British beef sold worldwide?

Accepted Answer

A)  The price of British beef falls and quantity sold also falls
B)  The price of British beef rises and quantity sold falls
C)  The price of British beef falls initially, but regains some of its losses; quantity sold initially rises, then falls
D)  The price of British beef falls initially, but regains some of its losses; quantity sold falls

Question 18

Start by drawing a supply and demand equilibrium situation.Using your diagram,demonstrate graphically and explain verbally the impact of an increase in demand on equilibrium price and quantity.What could cause this shift?

Accepted Answer

The diagram: <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The initial equilibrium is...

Question 19

An increase in price and an indeterminate change in quantity are consistent with a:

Accepted Answer

A)  leftward shift in demand and no shift in supply.
B)  leftward shift in supply and no shift in demand.
C)  rightward shift in supply and a leftward shift in demand.
D)  leftward shift in supply and a rightward shift in demand.

Question 20

More and more devices are being introduced into the market that perform tasks similar to that of PCs, such as tablets and smartphones. At the same time, the price of computer chips to make high-end PCs continues to fall. What is the effect of the events on equilibrium price and quantity of high-end PCs?

Accepted Answer

A)  Price falls continuously as does quantity sold.
B)  Price rises then falls while quantity sold falls continuously.
C)  Price falls continuously while quantity falls initially but then rises, recouping earlier losses.
D)  Price falls continuously and quantity rises continuously.

Exam 5: Using Supply and Demand

Correct Answer
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Refer to the following graphs. A recent report indicates that the device known as the right heart catheter used to diagnose heart conditions poses more risks than previously thought. The effect of the report on the market for right heart catheters is best shown by which of the graphs?

Correct Answer
verified

An increase in price and an indeterminate change in quantity are consistent with a:

Correct Answer
verified

Refer to the following graph. Which of the following pairs of equations describes the supply and demand curves?

Correct Answer
verified

Start by drawing a supply and demand equilibrium situation.Using your diagram,demonstrate graphically and explain verbally the impact of an increase in demand on equilibrium price and quantity.What could cause this shift?

Correct Answer
verified
The diagram: The initial equilibrium is...
View Answer

When people heard that there was a shortage of specialty dolls, they wanted even more of them. Because of this effect the pressure on the price of these dolls increased. The price of the dolls remained the same however. Thus, the shortage of these dolls:

Correct Answer
verified

The invention of a machine that increases milk production is discovered. If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

Correct Answer
verified

Correct Answer
verified

Refer to the following graph. Which price will create the greatest shortage?

Correct Answer
verified

Correct Answer
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Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. If a minimum wage is set at $4.00 (W = 4) , then:

Correct Answer
verified

Refer to the following graph. Demand and supply are initially D and S1, respectively. Which of the following best describes the effect of a $0.50 per pound tariff on Danish hams imported into the United States?

Correct Answer
verified

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

Correct Answer
verified

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price floor of $50 per ton. What would be the resulting market distortion?

Correct Answer
verified

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the total market expenditures on prescription drugs?

Correct Answer
verified

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What is the cost of this program to the third-party if a $2 co-pay is established?

Correct Answer
verified

An increase in quantity and an indeterminate change in price are consistent with a:

Correct Answer
verified

Correct Answer
verified

In the late 1990s "mad cow" disease caused people to buy less beef. It also caused the EU to ban imported British beef and the British government to ban the sale of older cattle. What is the effect of the following on price and quantity of British beef sold worldwide?

Correct Answer
verified

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Correct Answer
verified

Exam 5: Using Supply and Demand

Correct AnswerverifiedShow Answer

Refer to the following graphs. A recent report indicates that the device known as the right heart catheter used to diagnose heart conditions poses more risks than previously thought. The effect of the report on the market for right heart catheters is best shown by which of the graphs?

Correct AnswerverifiedShow Answer

An increase in price and an indeterminate change in quantity are consistent with a:

Correct AnswerverifiedShow Answer

Refer to the following graph. Which of the following pairs of equations describes the supply and demand curves?

Correct AnswerverifiedShow Answer

Start by drawing a supply and demand equilibrium situation.Using your diagram,demonstrate graphically and explain verbally the impact of an increase in demand on equilibrium price and quantity.What could cause this shift?

Correct AnswerverifiedThe diagram: The initial equilibrium is...View AnswerShow Answer

When people heard that there was a shortage of specialty dolls, they wanted even more of them. Because of this effect the pressure on the price of these dolls increased. The price of the dolls remained the same however. Thus, the shortage of these dolls:

Correct AnswerverifiedShow Answer

The invention of a machine that increases milk production is discovered. If farmers were to decry the effect of this new technology on the price of milk and lobby government to set the price of milk at the price before the invention, what would be the result?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the following graph. Which price will create the greatest shortage?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. If a minimum wage is set at $4.00 (W = 4) , then:

Correct AnswerverifiedShow Answer

Refer to the following graph. Demand and supply are initially D and S1, respectively. Which of the following best describes the effect of a $0.50 per pound tariff on Danish hams imported into the United States?

Correct AnswerverifiedShow Answer

If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:

Correct AnswerverifiedShow Answer

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price floor of $50 per ton. What would be the resulting market distortion?

Correct AnswerverifiedShow Answer

Refer to the graph shown that depicts a third-party payer market for prescription drugs. If the co-payment is $2 per pill, what will be the total market expenditures on prescription drugs?

Correct AnswerverifiedShow Answer

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What is the cost of this program to the third-party if a $2 co-pay is established?

Correct AnswerverifiedShow Answer

An increase in quantity and an indeterminate change in price are consistent with a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the late 1990s "mad cow" disease caused people to buy less beef. It also caused the EU to ban imported British beef and the British government to ban the sale of older cattle. What is the effect of the following on price and quantity of British beef sold worldwide?

Correct AnswerverifiedShow Answer

Trade sanctions imposed on Iraq that limited Iraq's production of oil after the 1990 Gulf War on the oil market are best shown graphically with a price ceiling below equilibrium price.

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
verified
The diagram: The initial equilibrium is...
View Answer

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Correct Answer
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