MBA 651 Final Exam Questions & Answers 2025
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. The equilibrium
quantity is: - ✔✔✔62.
Suppose the demand for good X is given by Qdx= 20 - 4Px + 2Py + M. The price of good X is $5, the price
of good Y is $15, and income is $150. Given these prices and income, how much of good X will be
purchased? - ✔✔✔180
Jane pays the market price of $69 for a new pair of running shoes, even though she would be happy to
pay a maximum of $100 for the same pair of shoes. This is an example of the concept of -
✔✔✔consumer surplus.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price
of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on
this information, we know that good X is - ✔✔✔a substitute for good Y and a normal good.
The demand function - ✔✔✔recognizes that the quantity of a good consumed depends on its price and
demand shifters.
Producer surplus is measured as the area - ✔✔✔above the supply curve and below the market price.
As additional firms enter an industry, the market supply curve - ✔✔✔shifts to the right.
The supply function for good X is given by Q x s = 1,000 + PX - 5 PY - 2PW , where PX is the price of X, PY
is the price of good Y and PW is the price of input W. If PX = 100, PY = 150 PW = 50, then the supply
curve is - ✔✔✔Q x s = 150 + Px.
In a competitive market, the market demand is Qd = 70 - 3P and the market supply is Qs = 6P. A price
ceiling of $4 will result in - ✔✔✔A shortage of 34 units.
Consumer surplus - ✔✔✔is the value consumers get from a good but do not pay for.
,Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it
more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and
quantity of wooden desks? - ✔✔✔price will increase but quantity will decrease.
Competitive market equilibrium - ✔✔✔is determined by the intersection of the market demand and
supply curves.
The supply function for good X is given by Q x s = 1,000 + PX - 5 PY - 2PW , where PX is the price of X, PY
is the price of good Y and PW is the price of input W. If the price of input W increases by $10, then the
supply of good X - ✔✔✔none of the above.
Firms advertise in order to cause the demand for their products to - ✔✔✔shift to the right.
An ad valorem tax shifts the supply curve - ✔✔✔by rotating it counter-clockwise.
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price
ceiling of $3 will result in - ✔✔✔A shortage of 30 units.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price
of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on
this information, we know that good Y is - ✔✔✔a substitute for good X.
All else held constant, as additional firms enter an industry - ✔✔✔more output is available at each given
price.
Technological advances will cause the supply curve to: - ✔✔✔shift to the right.
Advertising provides consumers with information about the underlying existence or quality of a product.
These types of advertising messages are called - ✔✔✔informative advertising.
An ad valorem tax causes supply curve to: - ✔✔✔become steeper.
,Other things held constant, the greater the price of a good - ✔✔✔the lower the consumer surplus.
Persuasive advertising influences demand by: - ✔✔✔altering the underlying tastes of consumers.
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. If the government sets
a price floor of $30 and agrees to purchase all surplus at $30 per unit, the total cost to the government
will be: - ✔✔✔$1,650.
Which of the following can explain an increase in the demand for housing in retirement communities? -
✔✔✔an increase in the population of the elderly.
When government imposes a price floor above the market price, the result will be that - ✔✔✔surpluses
occur.
The demand for food (a broad group) is more - ✔✔✔inelastic than the demand for beef (specific
commodity).
Assume that the price elasticity of demand is -0.75 for a certain firm's product. If the firm lowers price,
the firm's managers can expect total revenue to - ✔✔✔decrease
When the own price elasticity of good X is -3.5 then total revenue can be increased by - ✔✔✔decreasing
the price.
If the cross-price elasticity between ketchup and hamburgers is -2.5, a 2% increase in the price of
ketchup will lead to a - ✔✔✔5% drop in demanded of hamburgers.
If quantity demanded for sneakers falls by 10% when price increases 25% we know that the absolute
value of the own-price elasticity of sneakers is: - ✔✔✔0.4.
When a demand curve is linear, - ✔✔✔demand is inelastic at low prices.
, The demand for good X has been estimated by Q xd =12 - 3Px + 4Py. Suppose that good X sells at $2 per
unit and good Y sells for $1 per unit. Calculate the own price elasticity. - ✔✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The cross price
elasticity of demand between goods X and Y is - ✔✔✔4.
The demand for good X has been estimated by Q xd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per
unit and good Y sells for $2 per unit. Calculate the own price elasticity. - ✔✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The own price
elasticity of good X is - ✔✔✔-2.5.
We would expect the own price elasticity of demand for food to be: - ✔✔✔less elastic than the demand
for cereal.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will happen
to the quantity of apples demanded? - ✔✔✔It will increase 6%.
The demand for video recorders has been estimated to linear and given by the demand relation Qv =
145 - 3.2Pv + 7M - .95Pf - 39Pm, where Qv is the quantity of video recorders, Pf denotes the price of
video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and M is
income. Based on the estimated demand equation we can conclude: - ✔✔✔a and b. (video recorders
are normal goods. AND
video recorder film is a complement for video recorders.)
Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax , where Px= $4, Py = $2, and Ax = $50. What is
the advertising elasticity of demand for good x? - ✔✔✔0.52.
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is the price of
X, PY is the price of good Y, M is income and AX is the amount of advertising on X. Suppose the present
price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, the
cross price elasticity between goods X and Y is - ✔✔✔0.008.
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. The equilibrium
quantity is: - ✔✔✔62.
Suppose the demand for good X is given by Qdx= 20 - 4Px + 2Py + M. The price of good X is $5, the price
of good Y is $15, and income is $150. Given these prices and income, how much of good X will be
purchased? - ✔✔✔180
Jane pays the market price of $69 for a new pair of running shoes, even though she would be happy to
pay a maximum of $100 for the same pair of shoes. This is an example of the concept of -
✔✔✔consumer surplus.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price
of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on
this information, we know that good X is - ✔✔✔a substitute for good Y and a normal good.
The demand function - ✔✔✔recognizes that the quantity of a good consumed depends on its price and
demand shifters.
Producer surplus is measured as the area - ✔✔✔above the supply curve and below the market price.
As additional firms enter an industry, the market supply curve - ✔✔✔shifts to the right.
The supply function for good X is given by Q x s = 1,000 + PX - 5 PY - 2PW , where PX is the price of X, PY
is the price of good Y and PW is the price of input W. If PX = 100, PY = 150 PW = 50, then the supply
curve is - ✔✔✔Q x s = 150 + Px.
In a competitive market, the market demand is Qd = 70 - 3P and the market supply is Qs = 6P. A price
ceiling of $4 will result in - ✔✔✔A shortage of 34 units.
Consumer surplus - ✔✔✔is the value consumers get from a good but do not pay for.
,Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it
more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and
quantity of wooden desks? - ✔✔✔price will increase but quantity will decrease.
Competitive market equilibrium - ✔✔✔is determined by the intersection of the market demand and
supply curves.
The supply function for good X is given by Q x s = 1,000 + PX - 5 PY - 2PW , where PX is the price of X, PY
is the price of good Y and PW is the price of input W. If the price of input W increases by $10, then the
supply of good X - ✔✔✔none of the above.
Firms advertise in order to cause the demand for their products to - ✔✔✔shift to the right.
An ad valorem tax shifts the supply curve - ✔✔✔by rotating it counter-clockwise.
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price
ceiling of $3 will result in - ✔✔✔A shortage of 30 units.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price
of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on
this information, we know that good Y is - ✔✔✔a substitute for good X.
All else held constant, as additional firms enter an industry - ✔✔✔more output is available at each given
price.
Technological advances will cause the supply curve to: - ✔✔✔shift to the right.
Advertising provides consumers with information about the underlying existence or quality of a product.
These types of advertising messages are called - ✔✔✔informative advertising.
An ad valorem tax causes supply curve to: - ✔✔✔become steeper.
,Other things held constant, the greater the price of a good - ✔✔✔the lower the consumer surplus.
Persuasive advertising influences demand by: - ✔✔✔altering the underlying tastes of consumers.
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. If the government sets
a price floor of $30 and agrees to purchase all surplus at $30 per unit, the total cost to the government
will be: - ✔✔✔$1,650.
Which of the following can explain an increase in the demand for housing in retirement communities? -
✔✔✔an increase in the population of the elderly.
When government imposes a price floor above the market price, the result will be that - ✔✔✔surpluses
occur.
The demand for food (a broad group) is more - ✔✔✔inelastic than the demand for beef (specific
commodity).
Assume that the price elasticity of demand is -0.75 for a certain firm's product. If the firm lowers price,
the firm's managers can expect total revenue to - ✔✔✔decrease
When the own price elasticity of good X is -3.5 then total revenue can be increased by - ✔✔✔decreasing
the price.
If the cross-price elasticity between ketchup and hamburgers is -2.5, a 2% increase in the price of
ketchup will lead to a - ✔✔✔5% drop in demanded of hamburgers.
If quantity demanded for sneakers falls by 10% when price increases 25% we know that the absolute
value of the own-price elasticity of sneakers is: - ✔✔✔0.4.
When a demand curve is linear, - ✔✔✔demand is inelastic at low prices.
, The demand for good X has been estimated by Q xd =12 - 3Px + 4Py. Suppose that good X sells at $2 per
unit and good Y sells for $1 per unit. Calculate the own price elasticity. - ✔✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The cross price
elasticity of demand between goods X and Y is - ✔✔✔4.
The demand for good X has been estimated by Q xd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per
unit and good Y sells for $2 per unit. Calculate the own price elasticity. - ✔✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The own price
elasticity of good X is - ✔✔✔-2.5.
We would expect the own price elasticity of demand for food to be: - ✔✔✔less elastic than the demand
for cereal.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will happen
to the quantity of apples demanded? - ✔✔✔It will increase 6%.
The demand for video recorders has been estimated to linear and given by the demand relation Qv =
145 - 3.2Pv + 7M - .95Pf - 39Pm, where Qv is the quantity of video recorders, Pf denotes the price of
video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and M is
income. Based on the estimated demand equation we can conclude: - ✔✔✔a and b. (video recorders
are normal goods. AND
video recorder film is a complement for video recorders.)
Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax , where Px= $4, Py = $2, and Ax = $50. What is
the advertising elasticity of demand for good x? - ✔✔✔0.52.
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is the price of
X, PY is the price of good Y, M is income and AX is the amount of advertising on X. Suppose the present
price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, the
cross price elasticity between goods X and Y is - ✔✔✔0.008.
