Question 1

The market-clearing price refers to the:

Accepted Answer

A)  price where quantity supplied is the highest possible.
B)  price where quantity demanded and quantity supplied are the same.
C)  minimum price at which items could be sold.
D)  maximum price at which all suppliers are willing to sell their production.E) B) and C)
F) All of the above

Question 2

We study the simple model of competitive markets because it helps to:

Accepted Answer

A)  provide useful insights to markets that are not perfectly competitive.
B)  show how the government controls the economy.
C)  indicate whether buyers or sellers matter more.
D)  show how poorly the economy actually functions.E) A) and B)
F) C) and D)

Question 3

Upon Apple's announcement that the newest iPhone model will be released in the next six months, we could reasonably expect that demand for the current iPhone model will _____ due to a change in _____.

Accepted Answer

A)  decrease; expectations of future prices
B)  increase; expectations of future prices
C)  increase; the supply of the current model
D)  decrease; the price of a substitute goodE) B) and C)
F) A) and B)

Question 4

The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S) intersect. What was the original equilibrium price and quantity for this good?

Accepted Answer

A)  $5 and 30
B)  $5 and 20
C)  $10 and 20
D)  $20 and 10E) A) and B)
F) A) and C)

Question 5

Ray's company just announced that all employees will be receiving a 5 percent pay cut in order to avoid the company shutting down. Ray's demand for coffee, a normal good, will likely _____ and his demand curve will _____.

Accepted Answer

A)  decrease; shift to the right
B)  decrease; shift to the left
C)  increase; shift to the right
D)  increase; shift to the leftE) B) and C)
F) B) and D)

Question 6

Members who shop at a warehouse store, such as Sam's Club or Costco, pay very low prices on the goods and services they buy. Do these sorts of customers incur transaction costs?

Accepted Answer

A)  Yes, because they must be members to shop at the store.
B)  No, because they pay prices that are lower than at any other location.
C)  Yes, because they must buy a product in bulk.
D)  No, because they can return purchases for any reason.E) B) and D)
F) All of the above

Question 7

What assumption does the supply schedule make?

Accepted Answer

A)  Factors other than price remain the same.
B)  All factors except price must change.
C)  Factors other than supply remain the same.
D)  All factors except supply must change.E) None of the above
F) A) and B)

Question 8

The table shown depicts the demand and supply schedules of a good. At a price of $6.00, quantity demanded:

Accepted Answer

A)  exceeds quantity supplied, and a shortage (excess demand) exists.
B)  is less than quantity supplied, and a shortage (excess demand) exists.
C)  exceeds quantity supplied, and a surplus (excess supply) exists.
D)  is less than quantity supplied, and a surplus (excess supply) exists.E) A) and B)
F) None of the above

Question 9

Suppose the price of oil has recently increased, making it more expensive to manufacture ride-on lawn mowers. This oil price increase also makes it more expensive to run a ride-on mower. What is likely to happen to the market for ride-on lawn mowers as a result in the changing price of oil?

Accepted Answer

A)  Supply and demand will increase, increasing equilibrium quantity and having an indeterminate effect on price.
B)  Supply and demand will decrease, decreasing equilibrium quantity and having an indeterminate effect on price.
C)  Supply and demand will increase, increasing equilibrium price and having an indeterminate effect on quantity.
D)  Supply and demand will decrease, increasing equilibrium price and having an indeterminate effect on quantity.E) B) and D)
F) None of the above

Question 10

The law of supply states that, all else held equal, quantity supplied rises as:

Accepted Answer

A)  price falls.
B)  price rises.
C)  income rises.
D)  income falls.E) All of the above
F) B) and C)

Exam 3: Markets

Upon Apple's announcement that the newest iPhone model will be released in the next six months, we could reasonably expect that demand for the current iPhone model will _ due to a change in _.

Correct Answer
verified

The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S) intersect. What was the original equilibrium price and quantity for this good?

Correct Answer
verified

The table shown depicts the demand and supply schedules of a good. At a price of $6.00, quantity demanded:

Correct Answer
verified

Suppose the price of oil has recently increased, making it more expensive to manufacture ride-on lawn mowers. This oil price increase also makes it more expensive to run a ride-on mower. What is likely to happen to the market for ride-on lawn mowers as a result in the changing price of oil?

Correct Answer
verified

Members who shop at a warehouse store, such as Sam's Club or Costco, pay very low prices on the goods and services they buy. Do these sorts of customers incur transaction costs?

Correct Answer
verified

What assumption does the supply schedule make?

Correct Answer
verified

We study the simple model of competitive markets because it helps to:

Correct Answer
verified

The market-clearing price refers to the:

Correct Answer
verified

Ray's company just announced that all employees will be receiving a 5 percent pay cut in order to avoid the company shutting down. Ray's demand for coffee, a normal good, will likely _ and his demand curve will _.

Correct Answer
verified

The law of supply states that, all else held equal, quantity supplied rises as:

Correct Answer
verified

Exam 3: Markets

Upon Apple's announcement that the newest iPhone model will be released in the next six months, we could reasonably expect that demand for the current iPhone model will _____ due to a change in _____.

Correct AnswerverifiedShow Answer

The graph shown depicts the market for a good. Assume the market was originally in equilibrium where the demand curve (D) and supply curve (S) intersect. What was the original equilibrium price and quantity for this good?

Correct AnswerverifiedShow Answer

The table shown depicts the demand and supply schedules of a good. At a price of $6.00, quantity demanded:

Correct AnswerverifiedShow Answer

Suppose the price of oil has recently increased, making it more expensive to manufacture ride-on lawn mowers. This oil price increase also makes it more expensive to run a ride-on mower. What is likely to happen to the market for ride-on lawn mowers as a result in the changing price of oil?

Correct AnswerverifiedShow Answer

Members who shop at a warehouse store, such as Sam's Club or Costco, pay very low prices on the goods and services they buy. Do these sorts of customers incur transaction costs?

Correct AnswerverifiedShow Answer

What assumption does the supply schedule make?

Correct AnswerverifiedShow Answer

We study the simple model of competitive markets because it helps to:

Correct AnswerverifiedShow Answer

The market-clearing price refers to the:

Correct AnswerverifiedShow Answer

Ray's company just announced that all employees will be receiving a 5 percent pay cut in order to avoid the company shutting down. Ray's demand for coffee, a normal good, will likely _____ and his demand curve will _____.

Correct AnswerverifiedShow Answer

The law of supply states that, all else held equal, quantity supplied rises as:

Correct AnswerverifiedShow Answer

Upon Apple's announcement that the newest iPhone model will be released in the next six months, we could reasonably expect that demand for the current iPhone model will _ due to a change in _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Ray's company just announced that all employees will be receiving a 5 percent pay cut in order to avoid the company shutting down. Ray's demand for coffee, a normal good, will likely _ and his demand curve will _.

Correct Answer
verified

Correct Answer
verified