PN 4001 Final Exam – Questions With Verified
Solutions
A market system relies on _____ to determine what will be produced,
how it will be produced, and who will get it. Correct Answer -
tastes and preferences
An exchange mechanism that allows buyers to trade with sellers is
called _______. Correct Answer - a market
A market system relies on the government to answer the three basic
questions. Correct Answer - True
Every economic system must answer three basic questions. They are
_____. Correct Answer - What?, How?, and For Whom?
Because of scarcity, people have to make trade-offs. Correct
Answer - True
The income threshold model describes the relationship between
_____. Correct Answer - income and sales
Which of the following would be considered a normative statement?
Correct Answer - We should reduce our consumption of
fattening foods.
A description of the relationship between two or more variables is
called a _____ Correct Answer - A model
A rational decision maker ____. Correct Answer - maximizes an
objective subject to a constraint
,An economic model must be a realistic as possible to make good
predictions. Correct Answer - False
An economic theory is a prediction about cause and effect. Correct
Answer - True
To help simplify models, economists _____. Correct Answer -
make assumptions
Models are used to explain _____. Correct Answer - how much
of a product is produced
A good model _____. Correct Answer - makes clear predictions
and makes predictions are consistent with reality
Microeconomic models and predictions are used for making
decisions by _____. Correct Answer - Individuals, firms, and
governments
A market system relies on _____ to determine what will be produced,
how it will be produced, and who will get it. Correct Answer -
Prices
The study of the individual choices about allocation of scarce
resources is called _____. Correct Answer - Microeconomics
Because of scarcity, people have to make trade-offs. Correct
Answer - True
A tariff is a tax on imported products. Assume that solar panels
imported from China are a substitute for solar panels produced in
the U.S. If the U.S. government imposed a tariff on the purchase of
Chinese solar panels, the demand for U.S. solar panels would
increase. Correct Answer - True
,A leftward shift in the demand for apartments near a college campus
could be caused by an increase in the rental price of those
apartments. Correct Answer - False
An increase in the price of a product will increase the supply of the
product. Correct Answer - False
The supply for processed pork is given by Q = 178 + 40p - 60ph,
where ph is the price of hogs. An increase in the price of hogs from
$1.50 to $3.00 will ____. Correct Answer - Decrease the supply
of pork
Suppose the supply of vitrium is from other sources is fixed at 12
billion bricks per year. Your supply of vitrium is given by Q = 21.85
billion bricks + 0.023p. If the price of vitrium is $1,000 per brick,
how many billion bricks of vitrium will be produced? Correct
Answer - 56.85
When there is a shortage or excess supply in a market, the price
must rise to restore equilibrium. Correct Answer - True
The supply function for tomatoes to be processed into tomato paste
is given by Q = 0.2 + .55p, where p is the price of tomatoes in dollars
per ton and Q is millions of tons of tomatoes per year. The demand
function is given by Q = 2.6 - 0.2p + 0.15pst. Where pst is the price of
tomato paste in dollars per ton. If pst has a value of 110, the
equilibrium quantity is ( ) and the equilibrium price is ( ). round all
answer to two decimal places. Correct Answer - 14.06 and
25.20
The demand for copper is given by Q = 12.15 - 1.35p and the supply
of copper is given by Q = -9 + 9p. The equilibrium quantity is ( ) of
, copper is and the equilibrium price is ( ). Correct Answer -
9.36 and 2.04
You observe that both the price of organically grown food and the
the sales of organically grown food are rising. You know this must
be the result of an increase in the supply of organically grown food.
Correct Answer - False
The demand function for a product is given by Q = 220 - 2p, and the
supply function is given by Q = 20 + 3p - 20r, where r is the rental
cost of capital. If the rental cost of capital falls from 5 to 4.5, the
change in the quantity will be ( ) and the change in the price will be
$ ( ) Correct Answer - 4 and -2
A binding price floor results in a surplus or excess supply in the
market. Correct Answer - True
In attempt to reduce greenhouse gasses from entering the
atmosphere, the government requires all manufacturers to install
new pollution abatement equipment. In the market for pollution
abatement equipment, this will have the effect of ______. Correct
Answer - shifting the demand curve to the right
A binding price ceiling results in the quantity supplied being greater
than the quantity demanded. Correct Answer - False
In the used car market, the seller has more information about the
car than the buyer. The supply and demand model is not reliable in
this case. Correct Answer - True
The demand for a product is given by Q = 36.75 - 0.035p. What is the
slope of this demand curve? (Round your answer to 2 decimal
places.) Correct Answer - -28.57
Solutions
A market system relies on _____ to determine what will be produced,
how it will be produced, and who will get it. Correct Answer -
tastes and preferences
An exchange mechanism that allows buyers to trade with sellers is
called _______. Correct Answer - a market
A market system relies on the government to answer the three basic
questions. Correct Answer - True
Every economic system must answer three basic questions. They are
_____. Correct Answer - What?, How?, and For Whom?
Because of scarcity, people have to make trade-offs. Correct
Answer - True
The income threshold model describes the relationship between
_____. Correct Answer - income and sales
Which of the following would be considered a normative statement?
Correct Answer - We should reduce our consumption of
fattening foods.
A description of the relationship between two or more variables is
called a _____ Correct Answer - A model
A rational decision maker ____. Correct Answer - maximizes an
objective subject to a constraint
,An economic model must be a realistic as possible to make good
predictions. Correct Answer - False
An economic theory is a prediction about cause and effect. Correct
Answer - True
To help simplify models, economists _____. Correct Answer -
make assumptions
Models are used to explain _____. Correct Answer - how much
of a product is produced
A good model _____. Correct Answer - makes clear predictions
and makes predictions are consistent with reality
Microeconomic models and predictions are used for making
decisions by _____. Correct Answer - Individuals, firms, and
governments
A market system relies on _____ to determine what will be produced,
how it will be produced, and who will get it. Correct Answer -
Prices
The study of the individual choices about allocation of scarce
resources is called _____. Correct Answer - Microeconomics
Because of scarcity, people have to make trade-offs. Correct
Answer - True
A tariff is a tax on imported products. Assume that solar panels
imported from China are a substitute for solar panels produced in
the U.S. If the U.S. government imposed a tariff on the purchase of
Chinese solar panels, the demand for U.S. solar panels would
increase. Correct Answer - True
,A leftward shift in the demand for apartments near a college campus
could be caused by an increase in the rental price of those
apartments. Correct Answer - False
An increase in the price of a product will increase the supply of the
product. Correct Answer - False
The supply for processed pork is given by Q = 178 + 40p - 60ph,
where ph is the price of hogs. An increase in the price of hogs from
$1.50 to $3.00 will ____. Correct Answer - Decrease the supply
of pork
Suppose the supply of vitrium is from other sources is fixed at 12
billion bricks per year. Your supply of vitrium is given by Q = 21.85
billion bricks + 0.023p. If the price of vitrium is $1,000 per brick,
how many billion bricks of vitrium will be produced? Correct
Answer - 56.85
When there is a shortage or excess supply in a market, the price
must rise to restore equilibrium. Correct Answer - True
The supply function for tomatoes to be processed into tomato paste
is given by Q = 0.2 + .55p, where p is the price of tomatoes in dollars
per ton and Q is millions of tons of tomatoes per year. The demand
function is given by Q = 2.6 - 0.2p + 0.15pst. Where pst is the price of
tomato paste in dollars per ton. If pst has a value of 110, the
equilibrium quantity is ( ) and the equilibrium price is ( ). round all
answer to two decimal places. Correct Answer - 14.06 and
25.20
The demand for copper is given by Q = 12.15 - 1.35p and the supply
of copper is given by Q = -9 + 9p. The equilibrium quantity is ( ) of
, copper is and the equilibrium price is ( ). Correct Answer -
9.36 and 2.04
You observe that both the price of organically grown food and the
the sales of organically grown food are rising. You know this must
be the result of an increase in the supply of organically grown food.
Correct Answer - False
The demand function for a product is given by Q = 220 - 2p, and the
supply function is given by Q = 20 + 3p - 20r, where r is the rental
cost of capital. If the rental cost of capital falls from 5 to 4.5, the
change in the quantity will be ( ) and the change in the price will be
$ ( ) Correct Answer - 4 and -2
A binding price floor results in a surplus or excess supply in the
market. Correct Answer - True
In attempt to reduce greenhouse gasses from entering the
atmosphere, the government requires all manufacturers to install
new pollution abatement equipment. In the market for pollution
abatement equipment, this will have the effect of ______. Correct
Answer - shifting the demand curve to the right
A binding price ceiling results in the quantity supplied being greater
than the quantity demanded. Correct Answer - False
In the used car market, the seller has more information about the
car than the buyer. The supply and demand model is not reliable in
this case. Correct Answer - True
The demand for a product is given by Q = 36.75 - 0.035p. What is the
slope of this demand curve? (Round your answer to 2 decimal
places.) Correct Answer - -28.57
