MBA 621 Final Exam Questions & Answers Verified
100% Correct
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%.
100% Correct
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%.
