Homework answers / question archive / Question 11 If the demand for oranges is written as Q = 100 - 5p, then the inverse demand function is Q = 5p - 100

Question 11 If the demand for oranges is written as Q = 100 - 5p, then the inverse demand function is Q = 5p - 100

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Question 11

If the demand for oranges is written as Q = 100 - 5p, then the inverse demand function is

1. Q = 5p - 100.
2. p = 20 - 0.2Q.
3. Q = 20 - 0.2p.
4. p = 20 - 5Q.

 

Question 12

When deriving an Engel curve, the prices of both goods

 

1. increase by the same percentage as income.
2. can either decrease, increase or stay the same.
3. are held constant.
4. decrease by the same percentage as income.

 

Question 13

What links the decisions of consumers and firms in a market?

 

1. the government
2. Prices
3. Microeconomics
4. coordination officials

 

Question 14

If the income elasticity of hamburgers is -0.8 for John, then his share of income spent on hamburgers will ________ when his income increases.

 

1. Decrease
2. remain the same
3. not enough information
4. increase

 

Question 15

Municipalities that adopt a “rent control” policy specify a maximum rental rate on apartments that is much lower than the natural equilibrium rental rate. As a result,

 

1. there is a surplus of apartments.
2. landlords have a difficult time finding tenants.
3. the supply of apartments shifts to the right.
4. prospective tenants have a difficult time finding available apartments.

 

 

 

Question 16

Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase. This increase in the price of the good results in

 

1. an increase in quantity supplied.
2. a downward movement along the supply curve.
3. a rightward shift of the supply curve.
4. a leftward shift of the supply curve.

 

Question 17

Suppose the demand curve is perfectly inelastic and the supply curve is upward sloping.  If government imposes a specific tax on the product, the price sellers receive

 

1. is less than before the tax.
2. is unchanged.
3. is higher than before the tax.
4. depends on the supply elasticity.

 

Question 18

If two goods are perfect substitutes, then the indifference curves for those two goods would be

 

1. upward sloping and concave to the origin.
2. downward sloping and straight.
3. downward sloping and convex to the origin.
4. L-shape

 

Question 19

Consider the demand functions:

 

d1    Q?_d =_? 250 - 2P

 

d2    Q?_{d ?} = 300 - 3P

 

Which of the demand functions reflects a higher level of consumer incomes?

 

1. d1 and d2 reflect the same consumer incomes.
2. d2
3. d1
4. more information is neede

 

Question 20

Government is introducing a specific tax to a product market. Suppose the demand curve for the product is downward sloping and the supply curve is upward sloping. At the market equilibrium, if demand is more elastic than supply in absolute value, a $1 specific tax will

 

1. raise the price to consumers by less than 50 cents.
2. raise the price to consumers by 50 cents.
3. raise the price to consumers by $1.
4. raise the price to consumers by more than 50 cents.

 

Question 21

Government has introduced a sales tax (t) to be paid at the register in retail stores. You have calculated that this will drive a wedge in the price seen by sellers and demanders, causing suppliers to receive 2 - 0.5t for a product and buyers to pay 2 + 0.5t.  In this case what is the tax incidence?

 

1. Suppliers bear 50% of the tax and demanders bear 50% of the tax.
2. Suppliers bear 0% of the tax and demanders bear 100% of the tax.
3. Suppliers bear 1/3 of the tax and demanders bear 2/3 of the tax.
4. Suppliers bear 2/3 of the tax and demanders bear 1/3 of the tax.

 

Question 22

Technological innovation in the production of smart phones has led to

 

1. a decrease in the quantity demanded for smart phones.
2. a decrease in the quantity supplied of smart phones.
3. a rightward shift of the supply curve for smart phones.
4. a rightward shift of the demand curve for smart phones.

 

Question 23

Once a market equilibrium is achieved, it can persist indefinitely because

 

1. shocks to the demand curve are always exactly offset by shocks to the supply curve.
2. shocks that shift the demand curve or the supply curve cannot occur.
3. the government never intervenes in markets at equilibrium.
4. in the absence of supply/demand shocks, no one applies pressure to change the price.

 

Question 24

Suppose the demand curve for a good is expressed as Q = 50 - 2p. If the good currently sells for $3, then the price elasticity of demand could be calculated as:

 

1. -3 ∗ (44/2).
2. -2 ∗ (3/44).
3. -3 ∗ (2/50).
4. -2 ∗ (50/3).

 

Question 25

In a market economy

 

1. supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources.
2. demand determines supply and supply, in turn, determines prices.
3. the allocation of scarce resources determines prices and prices, in turn, determine supply and demand.
4. supply determines demand and demand, in turn, determines prices.

 

Question 26

An increase in U.S. consumer incomes, all else the same, will lead to

 

1. a movement upward along the market demand curve for vacations to Hawaii.
2. no change of the market demand curve for vacations to Hawaii.
3. a rightward shift of the market demand curve for vacations to Hawaii.
4. a rightward shift of the market supply curve for vacations to Hawaii.

 

Question 27

The expression “increase in quantity supplied” is illustrated graphically as a

 

1. movement down along the supply curve.
2. leftward shift in the supply curve.
3. movement up along the supply curve.
4. rightward shift in the supply curve.

 

Question 28

An indifference curve represents bundles of goods that a consumer

 

1. views as equally desirable.
2. prefers to any other bundle of goods.
3. does not have preferences over.
4. ranks from most preferred to least preferre

 

Question 29

Which of the following is an example of a normative statement?

 

1. Rising home prices have decreased the demand for new homes.
2. Thirty percent of millennials cannot afford to buy a home.
3. Home prices are too high and people should receive assistance to buy them.
4. Rising incomes have increased the demand for new homes.

 

Question 30

If a consumer prefers Apples to Bananas and prefers Bananas to Pears, in order to satisfy assumptions about preferences, she has to prefer

 

1. Pears to Bananas.
2. Bananas to Apples.
3. Pears to Apples.
4. Apples to Pears.