Question 1

The inverse supply equation for clay pots is P = 0.5Q S + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. What are the normal supply equation, the normal demand equation, and the resulting equilibrium price and quantity?

Accepted Answer

Solving P = 0.5Q^S + 1 for Q^S lea...

Question 2

A key assumption of the supply and demand model is that:

Accepted Answer

A)   each firm's good is unique and cannot be duplicated by other firms in the market.
B)   firms will continue to raise prices until profits become positive.
C)   each firm in the market produces an identical good.
D)   each firm produces at a level of output at which price exceeds marginal cost.E) All of the above
F) A) and B)

Question 3

The inverse supply equation for clay pots is P = 0.5QS + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. Which is more elastic at a price of $3.80, demand or supply? Round your answers to four decimal places.

Accepted Answer

To calculate the elasticity of demand:
E...

Question 4

Suppose that the inverse demand curve for a well-known sports car can be expressed as  , where price is in dollars and quantity is in numbers of cars. What is the price elasticity of demand at a quantity of 100?

Accepted Answer

A)   -1
B)   -2
C)   1
D)   2E) A) and C)
F) None of the above

Question 5

The market for cod liver oil pills is characterized by the demand and supply equations: QD = 100 - 4P and QS = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium quantity?

Accepted Answer

A)   10
B)   20
C)   30
D)   40E) None of the above
F) C) and D)

Question 6

To test whether the law of demand holds using calculus, you should:

Accepted Answer

A)   take the partial derivative of quantity demanded QD with respect to P and conclude that the law of demand holds if this derivative is positive at the market price.
B)   take the partial derivative of quantity demanded QD with respect to P and conclude that the law of demand holds if this derivative is negative at the market price.
C)   take the derivative of P with respect to quantity demanded QD and conclude that the law of demand holds if this derivative is positive at the market price.
D)   take the derivative of P with respect to quantity demanded QD and conclude that the law of demand holds if this derivative is negative at the market price.E) All of the above
F) A) and B)

Question 7

If the demand curve is QD = 10 - 2P, then the lowest price at which no consumer is willing to buy the good (i.e., the demand choke price)  is:

Accepted Answer

A)   10.
B)   2.
C)   7.
D)   5.E) A) and D)
F) All of the above

Question 8

The price of baseball tickets increased by 5%, leading to a 3% decrease in the number of tickets sold. Given this specific situation, total expenditures on baseball tickets:

Accepted Answer

A)   fell.
B)   stayed the same.
C)   increased.
D)   could have increased, decreased, or stayed the same depending on the price elasticity of demand.E) B) and D)
F) None of the above

Question 9

Suppose that the market demand and supply curves for chocolate ice cream are represented by the following equations:
QD = 10,000 - 50P
QS = -200 + 40P
where QD is the quantity demanded, QS is the quantity supplied, and P is the price.
a. Show that the law of demand holds using calculus.
b. Show that the law of supply holds using calculus.

Accepted Answer

Suggested Answer:
a. Using the derivativ...

Question 10

(Figure: Demand Shift I)  Which of the following events could have caused the demand curve to shift?  I. The price of a substitute good decreased.
II)  The price of a complement good increased.
III)  The income of consumers increased.
IV)  The number of buyers in the market increased.

Accepted Answer

A)   I, II, III, and IV
B)   III and IV
C)   II, III, and IV
D)   I and IIE) C) and D)
F) A) and B)

Question 11

The inverse demand curve for eggs is P = 20 - 0.25Q. What is the price elasticity of demand at P = $4?

Accepted Answer

A)   -0.45
B)   -2.0
C)   -4.0
D)   -0.25E) A) and D)
F) B) and C)

Question 12

On some days Gustav makes his own salad for lunch, preferring to use either iceberg or romaine lettuce, topped off with lots of fresh tomatoes. For Gustav, the cross-price elasticity of demand for iceberg lettuce with respect to romaine lettuce is _____, and the cross-price elasticity of demand for iceberg lettuce with respect to tomatoes is _____.

Accepted Answer

A)   positive; negative
B)   negative; positive
C)   zero; positive
D)   negative; zeroE) B) and D)
F) B) and C)

Question 13

Suppose that the extended market demand curve for maple syrup can be expressed as p is the price of pancake batter and I is income. Which of the following is true for this extended market demand? A)  Pancake batter and maple syrup are substitute goods because the partial derivative of the extended market demand with respect to the price of pancake batter is negative. B)  Pancake batter and maple syrup are substitute goods because the partial derivative of the extended market demand with respect to the price of pancake batter is positive. C)  Pancake batter and maple syrup are complement goods because the partial derivative of the extended market demand with respect to the price of pancake batter is positive. D)  Pancake batter and maple syrup are complement goods because the partial derivative of the extended market demand with respect to the price of pancake batter is negative." class="answers-bank-image d-inline" rel="preload" > , where Pp is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Accepted Answer

A)   Pancake batter and maple syrup are substitute goods because the partial derivative of the extended market demand with respect to the price of pancake batter is negative.
B)   Pancake batter and maple syrup are substitute goods because the partial derivative of the extended market demand with respect to the price of pancake batter is positive.
C)   Pancake batter and maple syrup are complement goods because the partial derivative of the extended market demand with respect to the price of pancake batter is positive.
D)   Pancake batter and maple syrup are complement goods because the partial derivative of the extended market demand with respect to the price of pancake batter is negative.E) A) and B)
F) A) and C)

Question 14

(Figure: Price Elasticity of Demand II)  Which of the following statements is TRUE regarding the figure?  ​
​
I. The price elasticity of demand is 
) 
II. The demand curve is perfectly inelastic.
III. An increase in price has no effect on quantity demanded.

Accepted Answer

A)   I and III
B)   I, II, and III
C)   II and III
D)   IIE) A) and B)
F) A) and D)

Question 15

Suppose that farmers can use their land to grow and sell soybeans and cotton. Cotton prices have risen. Farmers respond by producing _____ soybeans and _____ cotton.

Accepted Answer

A)   more; less
B)   less; more
C)   more; more
D)   less; lessE) B) and C)
F) All of the above

Question 16

The inverse supply equation for clay pots is P = 0.5Q S + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. What is the equilibrium price?

Accepted Answer

A)   $15
B)   $3.80
C)   $1.00
D)   $5.60E) C) and D)
F) B) and D)

Question 17

Suppose that the demand and supply curves for a good are given by QD = 1,000/P and QS = 10P. What is happening in the market at a price of $2?

Accepted Answer

A)   There is an excess demand of 480 units.
B)   There is an excess demand of 150 units.
C)   There is an excess supply of 480 units.
D)   There is an excess supply of 150 units.E) A) and D)
F) B) and C)

Question 18

A decrease in both demand and supply will cause a(n)  _____ equilibrium price and a(n)  _____ equilibrium quantity.

Accepted Answer

A)   uncertain effect on; decrease in
B)   increase in; decrease in
C)   increase in; uncertain effect on
D)   decrease in; uncertain effect onE) A) and C)
F) A) and D)

Question 19

Suppose that the extended market demand curve for maple syrup can be expressed as  
, where Pp is the price of pancake batter and I is income. 
a. Use calculus to argue whether pancake batter is a substitute for or complement to maple syrup.
b. Use calculus to argue whether maple syrup is a normal or an inferior good.

Accepted Answer

Exam 2: Supply and Demand

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. What is happening in the market at a price of $2?

Correct Answer
verified

Correct Answer
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Suggested Answer:
a. Since , ...
View Answer

Suppose that the inverse demand curve for a well-known sports car can be expressed as , where price is in dollars and quantity is in numbers of cars. What is the price elasticity of demand at a quantity of 100?

Correct Answer
verified

Correct Answer
verified

Suppose that the extended market demand curve for maple syrup can be expressed as , where P_p is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Correct Answer
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(Figure: Demand Shift I) Which of the following events could have caused the demand curve to shift? I. The price of a substitute good decreased. II) The price of a complement good increased. III) The income of consumers increased. IV) The number of buyers in the market increased.

Correct Answer
verified

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium quantity?

Correct Answer
verified

To test whether the law of demand holds using calculus, you should:

Correct Answer
verified

A key assumption of the supply and demand model is that:

Correct Answer
verified

Correct Answer
verified

The inverse demand curve for eggs is P = 20 - 0.25Q. What is the price elasticity of demand at P = $4?

Correct Answer
verified

The price of baseball tickets increased by 5%, leading to a 3% decrease in the number of tickets sold. Given this specific situation, total expenditures on baseball tickets:

Correct Answer
verified

(Figure: Price Elasticity of Demand II) Which of the following statements is TRUE regarding the figure? I. The price elasticity of demand is ) II. The demand curve is perfectly inelastic. III. An increase in price has no effect on quantity demanded.

Correct Answer
verified

Suppose that farmers can use their land to grow and sell soybeans and cotton. Cotton prices have risen. Farmers respond by producing _ soybeans and _ cotton.

Correct Answer
verified

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What is the equilibrium price?

Correct Answer
verified

Correct Answer
verified
Suggested Answer:
a. Using the derivativ...
View Answer

The inverse supply equation for clay pots is P = 0.5Q^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. Which is more elastic at a price of $3.80, demand or supply? Round your answers to four decimal places.

Correct Answer
verified
To calculate the elasticity of demand:
E...
View Answer

A decrease in both demand and supply will cause a(n) _ equilibrium price and a(n) _ equilibrium quantity.

Correct Answer
verified

If the demand curve is Q_D = 10 - 2P, then the lowest price at which no consumer is willing to buy the good (i.e., the demand choke price) is:

Correct Answer
verified

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What are the normal supply equation, the normal demand equation, and the resulting equilibrium price and quantity?

Correct Answer
verified
Solving P = 0.5Q^S + 1 for Q^S lea...
View Answer

Exam 2: Supply and Demand

Suppose that the demand and supply curves for a good are given by QD = 1,000/P and QS = 10P. What is happening in the market at a price of $2?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSuggested Answer:a. Since , ...View AnswerShow Answer

Suppose that the inverse demand curve for a well-known sports car can be expressed as , where price is in dollars and quantity is in numbers of cars. What is the price elasticity of demand at a quantity of 100?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the extended market demand curve for maple syrup can be expressed as , where Pp is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Correct AnswerverifiedShow Answer

(Figure: Demand Shift I) Which of the following events could have caused the demand curve to shift? I. The price of a substitute good decreased. II) The price of a complement good increased. III) The income of consumers increased. IV) The number of buyers in the market increased.

Correct AnswerverifiedShow Answer

The market for cod liver oil pills is characterized by the demand and supply equations: QD = 100 - 4P and QS = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium quantity?

Correct AnswerverifiedShow Answer

To test whether the law of demand holds using calculus, you should:

Correct AnswerverifiedShow Answer

A key assumption of the supply and demand model is that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The inverse demand curve for eggs is P = 20 - 0.25Q. What is the price elasticity of demand at P = $4?

Correct AnswerverifiedShow Answer

The price of baseball tickets increased by 5%, leading to a 3% decrease in the number of tickets sold. Given this specific situation, total expenditures on baseball tickets:

Correct AnswerverifiedShow Answer

(Figure: Price Elasticity of Demand II) Which of the following statements is TRUE regarding the figure? ​ ​ I. The price elasticity of demand is ) II. The demand curve is perfectly inelastic. III. An increase in price has no effect on quantity demanded.

Correct AnswerverifiedShow Answer

Suppose that farmers can use their land to grow and sell soybeans and cotton. Cotton prices have risen. Farmers respond by producing _____ soybeans and _____ cotton.

Correct AnswerverifiedShow Answer

The inverse supply equation for clay pots is P = 0.5Q S + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. What is the equilibrium price?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSuggested Answer:a. Using the derivativ...View AnswerShow Answer

The inverse supply equation for clay pots is P = 0.5QS + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. Which is more elastic at a price of $3.80, demand or supply? Round your answers to four decimal places.

Correct AnswerverifiedTo calculate the elasticity of demand:E...View AnswerShow Answer

A decrease in both demand and supply will cause a(n) _____ equilibrium price and a(n) _____ equilibrium quantity.

Correct AnswerverifiedShow Answer

If the demand curve is QD = 10 - 2P, then the lowest price at which no consumer is willing to buy the good (i.e., the demand choke price) is:

Correct AnswerverifiedShow Answer

The inverse supply equation for clay pots is P = 0.5Q S + 1; the inverse demand equation is P = -2QD + 15. Quantity is in thousands of units. What are the normal supply equation, the normal demand equation, and the resulting equilibrium price and quantity?

Correct AnswerverifiedSolving P = 0.5QS + 1 for QS lea...View AnswerShow Answer

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. What is happening in the market at a price of $2?

Correct Answer
verified

Correct Answer
verified
Suggested Answer:
a. Since , ...
View Answer

Correct Answer
verified

Correct Answer
verified

Suppose that the extended market demand curve for maple syrup can be expressed as , where P_p is the price of pancake batter and I is income. Which of the following is true for this extended market demand?

Correct Answer
verified

Correct Answer
verified

The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium quantity?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

(Figure: Price Elasticity of Demand II) Which of the following statements is TRUE regarding the figure? I. The price elasticity of demand is ) II. The demand curve is perfectly inelastic. III. An increase in price has no effect on quantity demanded.

Correct Answer
verified

Suppose that farmers can use their land to grow and sell soybeans and cotton. Cotton prices have risen. Farmers respond by producing _ soybeans and _ cotton.

Correct Answer
verified

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What is the equilibrium price?

Correct Answer
verified

Correct Answer
verified
Suggested Answer:
a. Using the derivativ...
View Answer

The inverse supply equation for clay pots is P = 0.5Q^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. Which is more elastic at a price of $3.80, demand or supply? Round your answers to four decimal places.

Correct Answer
verified
To calculate the elasticity of demand:
E...
View Answer

A decrease in both demand and supply will cause a(n) _ equilibrium price and a(n) _ equilibrium quantity.

Correct Answer
verified

If the demand curve is Q_D = 10 - 2P, then the lowest price at which no consumer is willing to buy the good (i.e., the demand choke price) is:

Correct Answer
verified

The inverse supply equation for clay pots is P = 0.5Q ^S + 1; the inverse demand equation is P = -2Q^D + 15. Quantity is in thousands of units. What are the normal supply equation, the normal demand equation, and the resulting equilibrium price and quantity?

Correct Answer
verified
Solving P = 0.5Q^S + 1 for Q^S lea...
View Answer