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Market demand is given as QD = 100 - P. Market supply is given as QS = 4P. If price increases from $40 to $44, what is the price elasticity of demand?


A) 0.2
B) 0.7
C) 1.7
D) 2.0

E) A) and B)
F) All of the above

Correct Answer

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If a study by the CMA found that brown sugar caused weight gain while white sugar caused weight loss, what would we see?


A) an increase in demand for brown sugar and a decrease in demand for white sugar
B) no change in either demand because weight loss is not a nonprice determinant of demand
C) an increase in demand for white sugar, and a decrease in the demand for brown sugar
D) a decrease in the demand for white sugar, but no change in the demand for brown sugar

E) C) and D)
F) A) and B)

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Which of the following reflects the downward-sloping demand curve?


A) Price is positively related to quantity supplied.
B) There is an inverse relationship between price and quantity demanded.
C) There is a direct relationship between price and quantity demanded.
D) When the price falls, buyers willingly buy less.

E) None of the above
F) C) and D)

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What are the roles of buyers and sellers in a perfectly competitive market?


A) Buyers determine supply and sellers determine demand.
B) Buyers determine demand and sellers determine supply.
C) Buyers and sellers as one group determine supply.
D) Buyers and sellers as one group determine demand.

E) A) and C)
F) B) and C)

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How is a market supply curve constructed?


A) by vertically summing individual supply curves
B) by horizontally summing individual supply curves
C) by finding the average quantity supplied of the market's individual supply curves
D) by summing a consumer's demands for all goods

E) A) and B)
F) None of the above

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What would an early frost in the vineyards of the Okanagan Valley cause?


A) an increase in the demand for wine, increasing price
B) an increase in the supply of wine, decreasing price
C) a decrease in the demand for wine, decreasing price
D) a decrease in the supply of wine, increasing price

E) B) and C)
F) A) and D)

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What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?


A) price will fall and the effect on quantity is ambiguous
B) price will rise and the effect on quantity is ambiguous
C) quantity will fall and the effect on price is ambiguous
D) quantity will rise and the effect on price is ambiguous

E) A) and B)
F) B) and D)

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Refer to the following: A. What is the difference between a "change in demand" and a "change in quantity demanded"? (Graph your answer.) B. For each of the following changes, determine whether there will be a movement along the demand curve or a shift in the demand curve. a. a change in the price of a related good b. a change in tastes c. a change in the number of buyers d. a change in price e. a change in expectations f. a change in income

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A. A change in demand refers to a shift ...

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Which of the following best describes a perfectly competitive market?


A) A seller who charges more than the going price can increase her profit.
B) If a seller charges more than the going price, buyers will go elsewhere.
C) A seller often charges less than the going price to increase sales and profit.
D) A buyer can influence the price of the product.

E) B) and D)
F) A) and B)

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Price, which is determined by all buyers and sellers as they interact in the marketplace, allocates the economy's scarce resources.

A) True
B) False

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Quantity demanded is equal to quantity supplied, at the equilibrium price.

A) True
B) False

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If a car manufacturer purchases new labour-saving technology for its assembly line, what would we NOT expect?


A) less labour to be used
B) the supply of cars produced to increase
C) costs to the firm to fall
D) the price of cars to be increased by the firm

E) A) and B)
F) B) and C)

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Refer to the following: A. What is the difference between a "change in supply" and a "change in quantity supplied"? (Graph your answer). B. For each of the following changes, determine whether there will be a change in quantity supplied or a change in supply. a. a change in the resource cost b. a change in producer expectations c. a change in price d. a change in technology e. a change in the number of sellers

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A. A change in supply refers to a shift ...

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Figure 4-3 Figure 4-3 -Refer to the Figure 4-3. If price in this market is currently $8, what would happen? A) Quantity supplied would be 40 and quantity demanded would be 60. B) Quantity supplied would be 60 and quantity demanded would be 40. C) Quantity supplied would be 50 and quantity demanded would be 50. D) Quantity supplied would be 70 and quantity demanded would be 30. -Refer to the Figure 4-3. If price in this market is currently $8, what would happen?


A) Quantity supplied would be 40 and quantity demanded would be 60.
B) Quantity supplied would be 60 and quantity demanded would be 40.
C) Quantity supplied would be 50 and quantity demanded would be 50.
D) Quantity supplied would be 70 and quantity demanded would be 30.

E) B) and C)
F) All of the above

Correct Answer

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Which of the following would be an example of a monopoly?


A) a bakery in a large city
B) local cement companies
C) a local electricity company
D) a potato farmer

E) A) and D)
F) None of the above

Correct Answer

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Market demand is given as QD = 150 - P. Market supply is given as QS = 4P. If price increases from $30 to $40, what is the price elasticity of demand?


A) 0.3
B) 0.7
C) 1.5
D) 2.0

E) All of the above
F) C) and D)

Correct Answer

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Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?


A) complementary goods
B) normal goods
C) inferior goods
D) substitute goods

E) B) and D)
F) B) and C)

Correct Answer

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Figure 4-2 Figure 4-2 -Refer to the Figure 4-2. What would happen at a price of $35? A) A shortage would exist and the price would tend to fall. B) A shortage would exist and the price would tend to rise. C) A surplus would exist and the price would tend to rise. D) A surplus would exist and the price would tend to fall. -Refer to the Figure 4-2. What would happen at a price of $35?


A) A shortage would exist and the price would tend to fall.
B) A shortage would exist and the price would tend to rise.
C) A surplus would exist and the price would tend to rise.
D) A surplus would exist and the price would tend to fall.

E) None of the above
F) A) and B)

Correct Answer

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On what basis is a good considered either a normal good or an inferior good?


A) the quality of the good
B) the price of the good
C) personal preference toward the good
D) the amount of a person's income

E) A) and B)
F) A) and C)

Correct Answer

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Ryan tells you that he thinks the price of potato chips, his favourite food, will decrease in the near future. How will he probably respond?


A) by decreasing his current demand for chips
B) by not changing his current demand for chips
C) by increasing his current demand for chips
D) by currently refusing to buy any more chips

E) A) and C)
F) A) and B)

Correct Answer

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