econ makeup exa m1

In the late 1970s, there was a large increase in the price of oil in the United States. During that same time, overall oil consumption decreased. This evidence suggests that during this time period the supply curve for oil shifted leftward the supply curve for oil shifted rightward the demand curve for oil shifted leftward the demand curve for oil shifted rightward

the supply curve for oil shifted leftward

The market demand for wheat is Q=400-20P+50Pc + 5(I). If the price of wheat, P, is $3, and the price of corn, Pc, is $8, and income, I, is $30, the price elasticity of demand for wheat is ___________. -0.25 None of the answers is correct -0.07 -1 -4

-0.07

The market demand for wheat is Q=400-20P+50Pc + 5(I). If the price of wheat, P, is $3, and the price of corn, Pc, is $8, and income, I, is $30, the price elasticity of demand for wheat is ___________. -4 -0.07 -0.25 -1 None of the answers is correct

-0.07

The market demand for wheat is Q= 500-60P + 80Pc + 10(I). If the price of wheat, P, is $6, and the price of corn, Pc, is $10, and income, I, is $50, the income elasticity of wheat is ___________. 0.5 2.88 None of the answers is correct 2 0.35

0.35

The market demand for wheat is Q=600-50P+70Pc + 10(I). If the price of wheat, P, is $4, and the price of corn, Pc, is $6, and income, I, is $100, the income elasticity of wheat is 2 None of the answers is correct 0.2 0.4 0.55

0.55

In 2007, many analysts were predicting large increases in home values. If market participants act on this information, which of the following would happen: 1. Demand will increase; 2. Demand will decrease; 3. Supply will increase; 4. Supply will decrease? 1 & 4 2 & 4 2 1 1 & 3

1 and 4

If the value of the price elasticity of demand is -0.75, this means that a 7.5 percent increase in price causes a 1 percent increase in quantity demanded 10 percent decrease in price causes a 7.5 percent increase in quantity demanded None of the answers is correct 0.75 percent increase in price causes a 1 percent increase in quantity demanded 7.5 percent decrease in price causes a 1 percent increase in quantity demanded

10 percent decrease in price causes a 7.5 percent increase in quantity demanded

The demand for books is Q=30-0.25P. The supply for books is Q=10+P. What is the market equilibrium price of books? 38 16 None of the answers is correct 48 32

16

If the value of the price elasticity of demand is -0.5, this means that a 20 percent decrease in price causes a 1 percent increase in quantity demanded 5 percent decrease in price causes a 2.5 percent increase in quantity demanded 5 percent decrease in price causes a 1 percent increase in quantity demanded None of the answers is correct 0.5 percent decrease in price causes a 1 percent increase in quantity demanded

5 percent decrease in price causes a 2.5 percent increase in quantity demanded

The demand for books is: Q=100-5P. The supply of books is: Q=10+5P. What is the market equilibrium price of books? 9 None of the answers is correct 32 18 36

9

Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long​ run? Why? The price elasticity of demand for paper towels should be larger A. in the long run as new substitutes enter the market. B. in the short run because paper towels are​ non-durable. C. in the long run because some firms may be constrained by production capacity. D. in the long run because paper towels are made in a cyclical industry. E. in the short run because it takes time for people to respond to price changes.

A

Which of the following will cause the supply of gasoline to increase? An increase in gasoline shipping costs A new national tax on gasoline None of the answers is correct. A decrease in the price of cars A decrease in the price of oil, an input to gasoline

A decrease in the price of oil, an input to gasoline

Suppose that, at the equilibrium price of rent for apartments in downtown Tucson, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a rent control policy that caps rents at a price which is 10 percent below the market clearing rent? A housing shortage equal to 20 percent of the market clearing quantity A housing shortage equal to 10 percent of the market clearing quantity A housing shortage equal to 18 percent of the market clearing quantity A housing shortage equal to 24 percent of the market clearing quantity A housing shortage equal to 15 percent of the market clearing quantity

A housing shortage equal to 18 percent of the market clearing quantity

Suppose that, at equilibrium price of natural gas, the price elasticity of demand is -1.5 and the price elasticity of supply is 0.5. What will result from a price ceiling that is 5 percent below the market clearing price? A shortage equal to 20 percent of the market clearing quantity A shortage equal to 10 percent of the market clearing quantity A shortage equal to 5 percent of the market clearing quantity A shortage equal to 1 percent of the market clearing quantity A shortage equal to 2 percent of the market clearing quantity

A shortage equal to 10 percent of the market clearing quantity

For which is the price elasticity of demand most elastic? A specific brand of distilled water There is no reason to suspect a difference in the price elasticity of demand for the three products. Distilled water Water

A specific brand of distilled water

The demand for baseballs has increased. Which of the following could have caused this? All of the answers are correct A decrease in the price of footballs An increase in the price of baseball gloves An increase in income and baseballs are a normal good

An increase in income and baseballs are a normal good

The demand for pens has increased. Which of the following could have caused this? A decrease in the price of pencils An increase in the price of paper which consumers use with their pens An increase in income and pens are a normal good All of the answers are correct

An increase in income and pens are a normal good

Which of the following will cause the demand for couches, a normal good, to increase? A decrease in the price of couches A decrease in income An increase in the price of pillows An increase in the price of chairs None of the answers is correct

An increase in the price of chairs

Farmers complain that they cannot make a living selling sugar at the current​ market-clearing price. They successfully lobby the government to initiate price controls on the sale of sugar. The government sets a price floor substantially above the equilibrium​ price, and no one is allowed to sell sugar for a price less than the price floor. As a​ result, A. the demand curve for sugar will shift to the left because of the higher price. B. there will be a surplus of sugar. C. the supply curve for sugar will shift to the right because of the higer price. D. All of the above are correct.

B

Suppose that unusually hot weather causes the demand curve for ice cream to shift to the right. Why will the price of ice cream rise to a new​ market-clearing level? The hot weather will A. shift the demand curve to the right​, initially creating a shortage until the price falls to where quantity supplied again equals quantity demanded. B. shift the demand curve to the right​, initially creating a shortage until the price rises to where quantity supplied again equals quantity demanded. C. cause the supply curve to become​ fixed, initially creating a shortage until the price rises to where quantity supplied again equals quantity demanded. D. shift the supply curve to the right​, initially creating a shortage until the price rises to where quantity supplied again equals quantity demanded. E. shift the demand curve to the right​, initially creating a surplus until the price rises to where quantity supplied again equals quantity demanded.

B

If a company increases its price in order to increase revenue, it will Be successful if demand is inelastic Be successful if supply is elastic Be successful if demand is elastic All of the answers are correct Be successful if supply is inelastic

Be successful if demand is inelastic

Which one of the following would not cause the demand for​ Coca-Cola to​ shift? A. ​Coca-Cola increases its advertising expenditures by 20 percent. B. The price of​ Pepsi-Cola increases. C. The cost of producing​ Coca-Cola increases. D. A new study finds that drinking​ Coca-Cola causes stomach cancer.

C

Which one of the following would not occur if the market price was above the​ market-clearing price? A. Producers would begin to lower their prices to sell off excess inventory. B. There would be a surplus. C. Consumers would bid up the price. D. Producers would want to produce and sell more than consumers would want to buy.

C

If we wanted to prove that pizza and beer are complementary goods, we would calculate the __________ of pizza with respect to beer and get a __________. income elasticity; number less than 1 income elasticity; negative number price elasticity of demand; number greater than negative 1 cross-price elasticity; positive number Cross-price elasticity; negative number

Cross-price elasticity; negative number

If we wanted to prove that pizza and beer are complementary goods, we would calculate the __________ of pizza with respect to beer and get a __________. income elasticity; number less than 1 price elasticity of demand; number greater than negative 1 cross-price elasticity; positive number income elasticity; negative number Cross-price elasticity; negative number

Cross-price elasticity; negative number

Even though the annual consumption of copper is now about 100 times greater than it was in​ 1880, the real price of copper has remained relatively unchanged. Which of the following help account for this​ pattern? A. New deposits that were cheaper to mine were discovered. B. More efficient technologies reduced production costs. C. Demand for copper grew dramatically. D. All of the above.

D

What about the price elasticity of demand for​ televisions? The price elasticity of demand for televisions should be larger A. in the long run because televisions are not made in a cyclical industry. B. in the short run as new substitutes enter the market. C. in the short run because it takes time for people to change their consumption habits. D. in the short run because televisions are durable. E. in the long run because some firms may be constrained by production capacity.

D

Which of the following will cause the demand for kerosene heaters to​ increase? A. A decrease in the price of kerosene heaters. B. An increase in the price of kerosene. C. An increase in the price of kerosene heaters. D. A decrease in the price of kerosene.

D

Why do​ long-run elasticities of demand differ from​ short-run elasticities? ​Long-run elasticities of demand differ from​ short-run elasticities because A. it takes time for people to change their consumption habits. B. durable goods last a relatively long time. C. firms may be constrained in the short run by production capacity. D. both A and B are correct. E. all of the above.

D

A 12% increase in the price of shoes results in a 7% decrease in the quantity of shoes demanded. The revenue received by shoe suppliers will ______ because the price elasticity of demand for shoes is _____ Decrease inelastic Not change; unitary elastic Increase; inelastic Increase; elastic Decrease; elastic

Increase; inelastic

Which of the following will cause the supply of roses to increase? None of the answers is correct An increase in the price of daisies An increase in fertilizer prices New regulations increasing the pollen restrictions on roses sold Technological change in the production of roses such as faster growing varieties

Technological change in the production of roses such as faster growing varieties

For most goods, the supply curve will be more inelastic if Demand is inelastic The good has many complements The producer has a long time to adjust to price changes The producer must adjust to price changes in a short amount of time Demand is elastic

The producer must adjust to price changes in a short amount of time

For most goods, the supply curve will be more inelastic if The producer must adjust to price changes in a short amount of time Demand is elastic Demand is inelastic The good has many complements The producer has a long time to adjust to price changes

The producer must adjust to price changes in a short amount of time

The demand for books is: Q=100-0.5P. The supply of books is: Q=10+2P. If P = $20, which of the following is true? There is a surplus equal to 40. There is a surplus, but it is impossible to determine how large The market is in equilibrium. None of the answers is correct. There is a shortage equal to 40.

There is a shortage equal to 40.

The demand for books is: Q=100-5P. The supply of books is: Q=10+5P. If P = $20, which of the following is true? There is a surplus equal to 110. The market is in equilibrium. There is a surplus, but it is impossible to determine how large None of the answers is correct. There is a surplus equal to 55.

There is a surplus equal to 110.

The market for steak is competitive with a current price of $10 per pound and a quantity of 200,000 pounds per day. Which of the following events would lead to a new equilibrium price of $8 and a new equilibrium quantity of 150,000? an decrease in the price of steak sauce a decrease in the price of Beyond Beef, a vegetarian substitute for cow meat new farming regulations that limit the amount of cows that a ranch can own a decrease in the price of cattle

a decrease in the price of Beyond Beef, a vegetarian substitute for cow meat

Mary manages the Dream Cream Cafe. She observes that both the equilibrium price of ice cream and the equilibrium quantity of ice cream cone have risen. What could be responsible for this pattern? a fall in the price of milk a fall in the price of flour a rise in the price of flour a rise in the price of milk

a fall in the price of flour

Terry manages the Wild Flour Bakery. She observes that both the equilibrium price of cream cheese and the equilibrium quantity of bagels have risen. What could be responsible for this pattern? a fall in the price of milk a rise in the price of flour a fall in the price of flour a rise in the price of milk

a fall in the price of flour

Which of the following will cause the demand for couches, a normal good, to increase? A decrease in income An increase in the price of pillows None of the answers is correct A decrease in the price of couches An increase in the price of chairs

an increase in the price of chairs

The market for potato chips is competitive with a current price of 5 dollars per pack and a quantity of 100,000 packs per day. Which of the following events would lead to a new equilibrium price of 7.5 dollars and a new equilibrium quantity of 125,000? an improvement in potato chips manufacturing technology. an increase in the price of other kinds of snacks that consumers eat instead of potato chips. an increase in the price of potatoes a decrease in the number of young people in the population

an increase in the price of other kinds of snacks that consumers eat instead of potato chips.

In the market for books, the current price is $10 per book and 100,000 books are sold. Which of the following events would lead to a new equilibrium price of $15 and quantity of 90,000 books? an increase in the price of paper an increase in the price of electronic reading devices a decrease in literacy rates an improvement in printing technology

an increase in the price of paper

If the Disneyland increases ticket price in order to increase revenue, it will be successful if supply is elastic be successful if demand is elastic not be successful if the demand curve slopes downward be successful if supply is inelastic be successful if demand is inelastic

be successful if demand is inelastic

A 9% decrease in the price of cookies results in a 5% increase in the quantity of cookies demanded. The revenue received by cookie suppliers will ______________because the price elasticity of demand for cookies is_________________ increase; elastic increase; inelastic decrease; elastic not change; unitary elastic decrease; inelastic

decrease; inelastic

For which is the price elasticity of demand most elastic? There is no reason to suspect a difference in price elasticity of demand for the 3 products Pizza Flour Domino's pizza

dominos

The cross price elasticity of demand is most likely to be negative between tacos and ____________. burritos sandwiches guacamole None of the answers is correct

guacamole

The income elasticity of demand for bedframes should be larger in the short run because it takes time for people to change their consumption habits. in the short run as new substitutes enter the market. in the long run because bedframes are not made in a cyclical industry. in the short run because bedframes are durable

in the short run because bedframes are durable

The income elasticity of demand for televisions should be larger in the short run because it takes time for people to change their consumption habits. in the short run as new substitutes enter the market. in the long run because televisions are not made in a cyclical industry. in the short run because televisions are durable

in the short run because televisions are durable

The cross price elasticity of demand is most likely to be negative between cereal and Pancakes Milk Bagels None of the answers is correct

milk

In the market for books, the current price is $10 per book and 100,000 books are sold. Which of the following events would lead to a new equilibrium price of $15 and quantity of 90,000 books? a decrease in literacy rates an increase in the price of electronic reading devices an improvement in printing technology an increase in the price of paper

increase in price of paper

If the price of strawberries rises 10% and as a result the quantity supplied rises by 8%, the price elasticity of supply for strawberries is Two of the answers are correct None of the answers is correct 1.25 Inelastic Elastic

inealsatic

If the price of bananas rises 5%, and as a result the quantity supplied rises by 3%, the price elasticity of supply for bananas is elastic Two of the answers are correct. 1.67. inelastic

inelastic

For most​ industries, supply is ▼ in the short run than in the long run.

less elastic