Khanh Nguyen Minh

Dashboard  PE_S2(2019-2020)DH45ISB-2  Problem sets  PS2

Started on Wednesday, 5 February 2020, 9:28 AM

State Finished
Completed on Wednesday, 5 February 2020, 10:01 AM
Time taken 32 mins 34 secs
Marks 55.0/55.0
Grade 10.0 out of 10.0 (100%)

Question 1 1. The negative relationship between price and quantity demanded

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Select one:
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a. a. applies to most goods in the economy.

b. b. is represented by a downward-sloping demand curve.

c. c. is referred to as the law of demand.

d. d. All of the above are correct.

correct
The correct answer is: d. All of the above are correct.

Question 2 2.Quantity demanded falls as the price rises and rises as the price falls, so we say that
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Select one:
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a. a.quantity demanded is determined by quantity supplied.

b. b.price is determined by quantity demanded.

c. c.quantity demanded is a function of demand.

d. d.quantity demanded is negatively related to the price.

correct
The correct answer is: d.quantity demanded is negatively related to the price.

Question 3 3. Which of the following changes would not shift the demand curve for a good or service?
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Select one:
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a. a. a change in income

b. b. a change in the price of the good or service

c. c. a change in expectations about the future price of the good or service

d. d. a change in the price of a related good or service

correct
The correct answer is: b. a change in the price of the good or service
Question 4 4. Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has
Correct increased. How would this price increase affect your demand for vanilla pudding?

Mark 1.0 out of 1.0

Select one:
a. a. It would decrease.

b. b. It would increase.
c. c. It would be unaffected.
d. d. There is insufficient information given to answer the question.

correct
The correct answer is: a. It would decrease.

Question 5 5. Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December and you will start a new job in January.
Correct You have no plans to purchase hot dogs in January. For you, hot dogs are

Mark 1.0 out of 1.0

Select one:
a. a.a substitute good.

b. b.a normal good.

c. c.an inferior good.

d. d.a law-of-demand good.

correct
The correct answer is: c.an inferior good.

Question 6 6. If Francis experiences a decrease in his income, we would expect that, as a result, Francis's demand for
Correct
Select one:
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a. a. each good he purchases will remain unchanged.
b. b. normal goods will decrease.

c. c. luxury goods will increase.

d. d. inferior goods will decrease.

correct
The correct answer is: b. normal goods will decrease.

Question 7 7.Ford Motor Company announces that it will offer $3,000 rebates on new Mustangs starting next month. As a result of this information, today's
Correct demand curve for Mustangs

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Select one:
a. a.shifts to the right.
b. b.shifts to the left.

c. c.shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information.
d. d.will not shift; rather, the demand curve for Mustangs will shift to the right next month.

correct
The correct answer is: b.shifts to the left.
Question 8 8. Holding the nonprice determinants of supply constant, a change in price would
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Select one:
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a. a.result in either a decrease in supply or an increase in supply.

b. b.result in a movement along a stationary supply curve.

c. c.result in a shift of demand.

d. d.have no effect on the quantity supplied.

correct
The correct answer is: b.result in a movement along a stationary supply curve.

Question 9 9. Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the government increases the minimum wage by $1.00
Correct an hour it is likely that the

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Select one:
a. a. demand for bicycle assembly workers will increase.
b. b. supply of bicycles will shift to the right.

c. c. supply of bicycles will shift to the left.

d. d. firm must increase output to maintain profit levels.

correct
The correct answer is: c. supply of bicycles will shift to the left.

Question 10 10. If car manufacturers begin utilizing new labor-saving technology on their assembly lines, we would not expect
Correct
Select one:
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a. a. a smaller quantity of labor to be used.

b. b. the supply of cars to increase.

c. c. costs to the firm to fall.

d. d. individual car manufacturers to move up and to the right along their individual supply curves.

correct
The correct answer is: d. individual car manufacturers to move up and to the right along their individual supply curves.

Question 11 11. Suppose there is an earthquake that destroys several corn canneries. Which of the following would not be a direct result of this event?
Correct
Select one:
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a. a. Sellers would decrease their ability to produce and sell as much as before at each relevant price.
b. b. The supply would decrease.

c. c. Buyers would not be willing to buy as much as before at each relevant price.
d. d. The equilibrium price would rise.

correct
The correct answer is: c. Buyers would not be willing to buy as much as before at each relevant price.
Question 12

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12. Refer to Table 1. The equilibrium price and quantity, respectively, are

Select one:
a. a.$4 and 40.
b. b.$6 and 30.

c. c.$8 and 30.

d. d.$10 and 35.

correct
The correct answer is: b.$6 and 30.

Question 13 13. Refer to Table 1. If the price were $8, a

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Select one:
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a. a.surplus of 50 units would exist and price would tend to fall.
b. b.surplus of 10 units would exist and price would tend to fall.
c. c.surplus of 25 units would exist and price would tend to fall.

d. d.shortage of 25 units would exist and price would tend to rise.

correct
The correct answer is: c.surplus of 25 units would exist and price would tend to fall.

Question 14 14. Refer to Table 1. If the price were $2, a

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Select one:
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a. a.shortage of 25 units would exist and price would tend to fall.

b. b.surplus of 50 units would exist and price would tend to rise.

c. c.surplus of 25 units would exist and price would tend to fall.

d. d.shortage of 50 units would exist and price would tend to rise.

correct
The correct answer is: d.shortage of 50 units would exist and price would tend to rise.
Question 15

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15. Refer to Figure 4-8. In this market, equilibrium price and quantity, respectively, are

Select one:
a. a. $14 and 70.

b. b. $12 and 40.

c. c. $10 and 50.
d. d. $8 and 50.

correct
The correct answer is: c. $10 and 50.

Question 16 16. Refer to Figure 4-8. If price in this market is currently $14, there would be a
Correct
Select one:
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a. a. shortage of 20 units and the law of demand predicts that the price will rise from $14 to a higher price.

b. b. excess supply of 20 units and the law of supply and demand predicts that the price will fall from $14 to a lower price.

c. c. shortage of 40 units and the law of supply predicts that the price will fall from $14 to a lower price.
d. d. surplus of 40 units and the law of supply and demand predicts that the price will fall from $14 to a lower price.

correct
The correct answer is: d. surplus of 40 units and the law of supply and demand predicts that the price will fall from $14 to a lower price.

Question 17 17. Refer to Figure 4-8. If there is currently a shortage of 30 units of the good, then
Correct
Select one:
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a. a. the law of demand predicts that the price will rise by $5 to eliminate the shortage.
b. b. the law of supply predicts that the price will rise by $5 to eliminate the shortage.

c. c. the law of supply and demand predicts that the price will rise by $3 to eliminate the shortage.
d. d. the law of supply and demand predicts that the price will fall from its current level by an indeterminate amount, exacerbating the
shortage.

correct
The correct answer is: c. the law of supply and demand predicts that the price will rise by $3 to eliminate the shortage.
Question 18 18. The demand for Werthers candy is likely
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Select one:
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a. a. elastic because candy is expensive relative to other snacks.

b. b. elastic because there are many close substitutes for Werthers.

c. c. elastic because Werthers are regarded as a necessity by many people.
d. d. inelastic because it is usually eaten quickly, making the relevant time horizon short.

correct
The correct answer is: b. elastic because there are many close substitutes for Werthers.

Question 19 19. It is likely that

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Select one:
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a. a. the demand for flat-screen computer monitors is more elastic than the demand for monitors in general.
b. b. the demand for grandfather clocks is more elastic than the demand for wristwatches.

c. c. the demand for cardboard is more elastic over a long period of time than over a short period of time.
d. d. All of the above are correct.

correct
The correct answer is: d. All of the above are correct.

Question 20 20. A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is
Correct
Select one:
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a. a. inelastic.
b. b. unit elastic.

c. c. elastic.
d. d. highly responsive to changes in income.

correct
The correct answer is: a. inelastic.

Question 21 21. Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over
Correct a ten-year period because

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Select one:
a. a. buyers tend to be much less sensitive to a change in price when given more time to react.
b. b. buyers tend to be much more sensitive to a change in price when given more time to react.

c. c. buyers will have substantially more income over a ten-year period.

d. d. the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.

correct
The correct answer is: b. buyers tend to be much more sensitive to a change in price when given more time to react.
Question 22 22. For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements
Correct is most likely applicable to this good?

Mark 1.0 out of 1.0

Select one:
a. a. There are no close substitutes for this good.

b. b. The good is a luxury.

c. c. The market for the good is broadly defined.
d. d. The relevant time horizon is short.

correct
The correct answer is: b. The good is a luxury.

Question 23 23. The local pizza restaurant makes such great bread sticks that consumers do not respond much at all to a change in the price. If the owner is
Correct only interested in increasing revenue, he should

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Select one:
a. a. lower the price of the bread sticks.
b. b. leave the price of the bread sticks alone.

c. c. raise the price of the bread sticks.

d. d. reduce costs.

correct
The correct answer is: c. raise the price of the bread sticks.

Question 24

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24. Refer to Figure 5-1. Assume the section of the demand curve labeled A corresponds to prices between $8 and $16. Then, when the price
changes between $9 and $10,

Select one:
a. a. quantity demanded changes proportionately less than the price.
b. b. quantity demanded changes proportionately more than the price.

c. c. quantity demanded changes the same amount proportionately as price.

d. d. the price elasticity of demand is less than 1.

correct
The correct answer is: b. quantity demanded changes proportionately more than the price.
Question 25 25. If the demand for donuts is elastic, then a decrease in the price of donuts will
Correct
Select one:
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a. a. increase total revenue of donut sellers.

b. b. decrease total revenue of donut sellers.

c. c. not change total revenue of donut sellers.
d. d. There is not enough information to answer this question.

correct
The correct answer is: a. increase total revenue of donut sellers.

Question 26 26. Harry's Barber Shop increased its total monthly revenue from $1,500 to $1,800 when it raised the price of a haircut from $5 to $9. The price
Correct elasticity of demand for Harry's Haircuts is

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Select one:
a. a. 0.567.
b. b. 0.700.

c. c. 1.429.
d. d. 2.200.

correct
The correct answer is: b. 0.700.

Question 27

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27. Refer to Figure 5-5. An increase in price from $20 to $30 would

Select one:
a. a. increase total revenue by $2,000.
b. b. decrease total revenue by $2,000.

c. c. increase total revenue by $1,000.

d. d. decrease total revenue by $1,000.

correct
The correct answer is: c. increase total revenue by $1,000.
Question 28 28. Refer to Figure 5-5. An increase in price from $30 to $35 would
Correct
Select one:
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a. a. increase total revenue by $250

b. b. decrease total revenue by $250.

c. c. increase total revenue by $500.
d. d. decrease total revenue by $500.

correct
The correct answer is: b. decrease total revenue by $250.

Question 29 29. For a horizontal demand curve,

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Select one:
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a. a. slope is undefined and price elasticity of demand is equal to 0.
b. b. slope is equal to 0 and price elasticity of demand is undefined.

c. c. slope and price elasticity of demand both are undefined.

d. d. slope and price elasticity of demand both are equal to 0.

correct
The correct answer is: b. slope is equal to 0 and price elasticity of demand is undefined.

Question 30 30. Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, he household income was only
Correct $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is

Mark 1.0 out of 1.0

Select one:
a. a. positive, so Joan considers hamburger to be an inferior good.
b. b. positive, so Joan considers hamburger to be a normal good and a necessity.

c. c. negative, so Joan considers hamburger to be an inferior good.

d. d. negative, so Joan considers hamburger to be a normal good, but not a necessity.

correct
The correct answer is: c. negative, so Joan considers hamburger to be an inferior good.

Question 31 31. Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of
Correct hot dogs will cause the quantity of mustard purchased to

Mark 1.0 out of 1.0

Select one:
a. a. fall by 200 percent.
b. b. fall by 40 percent.

c. c. rise by 200 percent.

d. d. rise by 40 percent.

correct
The correct answer is: b. fall by 40 percent.
Question 32 32. Cross-price elasticity of demand measures how
Correct
Select one:
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a. a. the price of one good changes in response to a change in the price of another good.

b. b. the quantity demanded of one good changes in response to a change in the quantity demanded of another good.
c. c. the quantity demanded of one good changes in response to a change in the price of another good.
d. d. strongly normal or inferior a good is.

correct
The correct answer is: c. the quantity demanded of one good changes in response to a change in the price of another good.

Question 33 33. Which of the following expressions represents a cross-price elasticity of demand?
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Select one:
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a. a. percentage change in quantity demanded of apples divided by percentage change in quantity supplied of apples
b. b. percentage change in quantity demanded of apples divided by percentage change in price of pears

c. c. percentage change in price of apples divided by percentage change in quantity demanded of apples
d. d. percentage change in quantity demanded of apples divided by percentage change in income

correct
The correct answer is: b. percentage change in quantity demanded of apples divided by percentage change in price of pears

Question 34 34. Generally, a firm is more willing and able to increase quantity supplied in response to a price change when
Correct
Select one:
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a. a. the relevant time period is short rather than long.
b. b. the relevant time period is long rather than short.

c. c. supply is inelastic.
d. d. the firm is experiencing capacity problems.

correct
The correct answer is: b. the relevant time period is long rather than short.

Question 35 35. The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total
Correct revenue if

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Select one:
a. a. the supply of wheat is elastic.
b. b. the supply of wheat is inelastic.

c. c. the demand for wheat is inelastic.

d. d. the demand for wheat is elastic.

correct
The correct answer is: d. the demand for wheat is elastic.
Question 36 36. Price controls are usually enacted
Correct
Select one:
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a. a. as a means of raising revenue for public purposes.

b. b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
c. c. when policymakers detect inefficiencies in a market.
d. d. All of the above are correct.

correct
The correct answer is: b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Question 37 37. A price ceiling will be binding only if it is set

Correct
Select one:
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a. a. equal to equilibrium price.
b. b. above equilibrium price.

c. c. below equilibrium price.

d. d. none of the above; a price ceiling is never binding.

correct
The correct answer is: c. below equilibrium price.

Question 38 38. When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market
Correct causes quantity demanded to be

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Select one:
a. a. greater than quantity supplied.

b. b. less than quantity supplied.

c. c. equal to quantity supplied.

d. d. Any of the above is possible.

correct
The correct answer is: a. greater than quantity supplied.

Question 39 39. Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of
Correct $150 per physical. As a result of the price ceiling,

Mark 1.0 out of 1.0

Select one:
a. a. the demand curve for physicals shifts to the right.
b. b. the supply curve for physicals shifts to the left.

c. c. the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
d. d. the number of physicals performed will increase.

correct
The correct answer is: c. the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
Question 40

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40. Refer to Figure 6-4. For a price ceiling to be binding, it would have to be set at

Select one:
a. a. any price below $6.00.

b. b. a price between $4.00 and $6.00.

c. c. a price between $6.00 and $8.00.
d. d. any price above $6.00.

correct
The correct answer is: a. any price below $6.00.

Question 41 41. Refer to Figure 6-4. Suppose a price floor of $7.00 is imposed. As a result,
Correct
Select one:
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a. a. buyers' total expenditure on the good decreases by $20.00.
b. b. the supply curve will shift to the left so as to now pass through the point (Q = 40, P = $7.00).

c. c. the quantity of the good demanded decreases by 20 units.

d. d. the price of the good continues to serve as the rationing mechanism.

correct
The correct answer is: a. buyers' total expenditure on the good decreases by $20.00.
Question 42

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42. Refer to Figure 6-6. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Select one:
a. a. the price will increase to P3.

b. b. a surplus will occur at the new market price of P2.

c. c. the market price will stay at P1 due to the price ceiling.
d. d. a shortage will occur at the price ceiling of P2.

correct
The correct answer is: d. a shortage will occur at the price ceiling of P2.

Question 43 43. Which of the following statements about the effects of rent control is correct?
Correct
Select one:
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a. a. The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments.
b. b. The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger
shortage of apartments.

c. c. In the long run, rent control leads to a shortage of apartments, and the quality of available apartments is improved by rent control.
d. d. The effects of rent control are very noticeable to the public in the short run, because the primary effects of rent control occur very
quickly.

correct
The correct answer is: b. The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is
a larger shortage of apartments.
Question 44

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44. Refer to Figure 6-8. The effective price that buyers pay after the tax is imposed is

Select one:
a. a. $8.

b. b. $6.
c. c. $5.
d. d. $3.

correct
The correct answer is: a. $8.

Question 45 45. Refer to Figure 6-8. The tax size is

Correct
Select one:
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a. a. $8.
b. b. $6.

c. c. $5.
d. d. $3.

correct
The correct answer is: d. $3.
Question 46

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46. Refer to Figure 6-8. The burden of the tax on buyers is

Select one:
a. a. $1.00 per unit.

b. b. $1.50 per unit.

c. c. $2.00 per unit.
d. d. $3.00 per unit.

correct
The correct answer is: c. $2.00 per unit.

Question 47 47. Refer to Figure 6-8. The burden of the tax on sellers is
Correct
Select one:
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a. a. $1.00 per unit.
b. b. $1.50 per unit.

c. c. $2.00 per unit.

d. d. $3.00 per unit.

correct
The correct answer is: a. $1.00 per unit.
Question 48

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48. Refer to Figure 6-12. In which market will the majority of the tax burden fall on the buyer?

Select one:
a. a. market (a)

b. b. market (b)
c. c. market (c)
d. d. All of the above are correct.

correct
The correct answer is: b. market (b)

Question 49 49. Refer to Figure 6-12. In which market will the majority of the tax burden fall on the seller?
Correct
Select one:
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a. a. market (a)
b. b. market (b)

c. c. market (c)
d. d. All of the above are correct.

correct
The correct answer is: a. market (a)
Question 50 50. Suppose the demand curve for a good is very flat and the supply curve for the good is very steep. If the government taxes this good,
Correct
Select one:
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a. a. buyers and sellers will each share 50 percent of the burden, regardless of the slopes of the demand and supply curves.

b. b. sellers will bear a larger share of the tax burden and buyers will bear a smaller share of the burden.
c. c. the distribution of the burden will depend upon whether the buyers or the sellers are required to send the tax to the government.
d. d. the amount of tax revenue collected by the government will depend upon whether the buyers or the sellers are required to send the tax
to the government.

correct
The correct answer is: b. sellers will bear a larger share of the tax burden and buyers will bear a smaller share of the burden.

Question 51 51. Suppose that a tax is placed on books. If the buyers pay the majority of the tax, we know that the
Correct
Select one:
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a. a. demand is more inelastic than the supply.
b. b. supply is more inelastic than the demand.

c. c. government has required that buyers remit the tax payments.

d. d. government has required that buyers remit the tax payments.

correct
The correct answer is: a. demand is more inelastic than the supply.

Question 52 52. A $2.00 tax placed on the sellers of mailboxes will shift the supply curve
Correct
Select one:
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a. a. upward by exactly $2.00.
b. b. upward by less than $2.00.

c. c. downward by exactly $2.00.

d. d. downward by less than $2.00.

correct
The correct answer is: a. upward by exactly $2.00.

Question 53 53. Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes
Correct the price paid by buyers of liquor to rise by $0.80 per bottle. Which of the following statements is correct?

Mark 1.0 out of 1.0

Select one:
a. a. This tax causes the demand curve for liquor to shift downward by $0.80 at each quantity of liquor.
b. b. The incidence of the tax is summarized by the fact that sellers send the tax payments to the government.

c. c. Eighty percent of the burden of the tax falls on buyers.

d. d. All of the above are correct.

correct
The correct answer is: c. Eighty percent of the burden of the tax falls on buyers.
 Question 54 54. In general, a tax burden falls more heavily on the side of the market that
Correct
Select one:
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a. a. has a fewer number of participants.

b. b. is more elastic.

c. c. is unit elastic.
d. d. is less elastic.

correct
The correct answer is: d. is less elastic.

Question 55 55. In which of these cases will the tax burden fall most heavily on buyers of the good?
Correct
Select one:
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a. a. The demand curve is relatively steep and the supply curve is relatively flat.
b. b. The demand curve is relatively flat and the supply curve is relatively steep.

c. c. The demand curve and the supply curve are both relatively flat.
d. d. The demand curve and the supply curve are both relatively steep.

correct
The correct answer is: a. The demand curve is relatively steep and the supply curve is relatively flat.

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