Question 1

After a natural disaster, a binding price ceiling on bottled water will lead to:

Accepted Answer

A)   a shortage of bottled water
B)   an increase in supply of bottled water
C)   supplied surplus of bottled water
D)   a decrease in the supply of bottled waterE) All of the above
F) B) and D)

Question 2

A higher price for batteries would tend to:

Accepted Answer

A)   increase the demand for torches
B)   decrease the demand for electricity
C)   increase the demand for electricity
D)   increase the demand for batteriesE) A) and D)
F) B) and C)

Question 3

Which one of the following is not a determinant of demand?

Accepted Answer

A)   the price of a close-substitute good
B)   income levels of consumers
C)   tastes
D)   the prices of raw materialsE) C) and D)
F) All of the above

Question 4

Supply and demand are the concepts that economists use most often.

Accepted Answer

A) True 
 B)False

Question 5

In a free market, the relationship between price and quantity demanded of a good can be called:

Accepted Answer

A)   supply and demand
B)   the law of demand
C)   the law of supply
D)   market demandE) A) and B)
F) All of the above

Question 6

Suppose a coffee plantation in Colombia increases the quantity of coffee beans it supplies by 5 per cent when it learns that the price of coffees at cafes in Melbourne has risen by 25 per cent. The Colombian producer's price elasticity of supply of coffee beans is 0.2.

Accepted Answer

A) True 
 B)False

Question 7

Demand is said to be elastic if:

Accepted Answer

A)   the price of the good responds substantially to changes in demand
B)   the supply of the good responds weakly to changes in demand
C)   the quantity demanded responds substantially to changes in the quantity supplied of the good
D)   the quantity demanded responds substantially to changes in the price of the goodE) A) and C)
F) C) and D)

Question 8

When an increase in the price of one good lowers the price of another good, the two goods are called substitutes.

Accepted Answer

A) True 
 B)False

Question 9

The demand for apples is generally more price elastic than the demand for Australian apples.

Accepted Answer

A) True 
 B)False

Question 10

Andy has discovered a new way to make clothes pegs more cheaply than his competitors. He believes that since he can now sell his clothes pegs at a lower prices than other clothes peg providers on the market, he will be able to increase his revenue by attracting more customers. He estimates the price elasticity of demand for clothes pegs to be 0.7. What will happen to his total revenue if he decreases the price of his clothes pegs? What should Andy do?

Accepted Answer

The price elasticity of demand for his c...

Question 11

Some countries use price floors for their domestic farmers to guarantee them a high return on their production. Suppose there is a price floor on wool that is binding. What will be the effect on the wool market? Identify who benefits from this policy and who bears the cost. Are there instances of this occurring in Australia's history?

Accepted Answer

Wool prices will be higher and this will...

Question 12

What are two types of markets? What are their characteristics?

Accepted Answer

Any of the following are acceptable:
a. ...

Question 13

Individual demand curves are summed horizontally to obtain the market demand curve.

Accepted Answer

A) True 
 B)False

Question 14

If a seller in a competitive market chooses to charge more than the market price, then:

Accepted Answer

A)   buyers will tend to make their purchases elsewhere
B)   the prices in factor markets would also rise
C)   other sellers would also raise their price
D)   buyers would tend to buy more from this sellerE) B) and C)
F) A) and B)

Question 15

What are common arguments offered for and against the minimum wage?

Accepted Answer

Advocates of the minimum wage often reco...

Question 16

Goods with close substitutes tend to be more price elastic demand than goods without close substitutes.

Accepted Answer

A) True 
 B)False

Question 17

Given the following demand schedule, graph Lee's weekly demand curve for coffee.

Accepted Answer

The answer of Given the following demand schedule, graph Lee's...

Question 18

Generally, the market for water in Australia would be considered:

Accepted Answer

A)   a monopolistic market
B)   more organised than an auction
C)   a competitive market
D)   a monopsonistic marketE) B) and D)
F) B) and C)

Question 19

Many advocates of raising the minimum wage argue that the adverse effects of such a move, for example higher unemployment, are likely to be small. Suppose the minimum wage is binding. Under what conditions will an increase in the minimum wage lead to only a small increase in unemployment?

Accepted Answer

A given increase in price leads to a sma...

Question 20

The market demand is the average of all of the individual demands for a particular good or service.

Accepted Answer

A) True 
 B)False

Exam 4: The Market Forces of Supply and Demand

Correct Answer
verified
The price elasticity of demand for his c...
View Answer

Many advocates of raising the minimum wage argue that the adverse effects of such a move, for example higher unemployment, are likely to be small. Suppose the minimum wage is binding. Under what conditions will an increase in the minimum wage lead to only a small increase in unemployment?

Correct Answer
verified
A given increase in price leads to a sma...
View Answer

Demand is said to be elastic if:

Correct Answer
verified

What are common arguments offered for and against the minimum wage?

Correct Answer
verified
Advocates of the minimum wage often reco...
View Answer

The demand for apples is generally more price elastic than the demand for Australian apples.

Correct Answer
verified

After a natural disaster, a binding price ceiling on bottled water will lead to:

Correct Answer
verified

When an increase in the price of one good lowers the price of another good, the two goods are called substitutes.

Correct Answer
verified

If a seller in a competitive market chooses to charge more than the market price, then:

Correct Answer
verified

Given the following demand schedule, graph Lee's weekly demand curve for coffee.

Correct Answer
verified

Correct Answer
verified
Wool prices will be higher and this will...
View Answer

Individual demand curves are summed horizontally to obtain the market demand curve.

Correct Answer
verified

What are two types of markets? What are their characteristics?

Correct Answer
verified
Any of the following are acceptable:
a. ...
View Answer

Generally, the market for water in Australia would be considered:

Correct Answer
verified

Goods with close substitutes tend to be more price elastic demand than goods without close substitutes.

Correct Answer
verified

Which one of the following is not a determinant of demand?

Correct Answer
verified

In a free market, the relationship between price and quantity demanded of a good can be called:

Correct Answer
verified

A higher price for batteries would tend to:

Correct Answer
verified

Supply and demand are the concepts that economists use most often.

Correct Answer
verified

Suppose a coffee plantation in Colombia increases the quantity of coffee beans it supplies by 5 per cent when it learns that the price of coffees at cafes in Melbourne has risen by 25 per cent. The Colombian producer's price elasticity of supply of coffee beans is 0.2.

Correct Answer
verified

The market demand is the average of all of the individual demands for a particular good or service.

Correct Answer
verified

Exam 4: The Market Forces of Supply and Demand

Correct AnswerverifiedThe price elasticity of demand for his c...View AnswerShow Answer

Many advocates of raising the minimum wage argue that the adverse effects of such a move, for example higher unemployment, are likely to be small. Suppose the minimum wage is binding. Under what conditions will an increase in the minimum wage lead to only a small increase in unemployment?

Correct AnswerverifiedA given increase in price leads to a sma...View AnswerShow Answer

Demand is said to be elastic if:

Correct AnswerverifiedShow Answer

What are common arguments offered for and against the minimum wage?

Correct AnswerverifiedAdvocates of the minimum wage often reco...View AnswerShow Answer

The demand for apples is generally more price elastic than the demand for Australian apples.

Correct AnswerverifiedShow Answer

After a natural disaster, a binding price ceiling on bottled water will lead to:

Correct AnswerverifiedShow Answer

When an increase in the price of one good lowers the price of another good, the two goods are called substitutes.

Correct AnswerverifiedShow Answer

If a seller in a competitive market chooses to charge more than the market price, then:

Correct AnswerverifiedShow Answer

Given the following demand schedule, graph Lee's weekly demand curve for coffee.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWool prices will be higher and this will...View AnswerShow Answer

Individual demand curves are summed horizontally to obtain the market demand curve.

Correct AnswerverifiedShow Answer

What are two types of markets? What are their characteristics?

Correct AnswerverifiedAny of the following are acceptable:a. ...View AnswerShow Answer

Generally, the market for water in Australia would be considered:

Correct AnswerverifiedShow Answer

Goods with close substitutes tend to be more price elastic demand than goods without close substitutes.

Correct AnswerverifiedShow Answer

Which one of the following is not a determinant of demand?

Correct AnswerverifiedShow Answer

In a free market, the relationship between price and quantity demanded of a good can be called:

Correct AnswerverifiedShow Answer

A higher price for batteries would tend to:

Correct AnswerverifiedShow Answer

Supply and demand are the concepts that economists use most often.

Correct AnswerverifiedShow Answer

Suppose a coffee plantation in Colombia increases the quantity of coffee beans it supplies by 5 per cent when it learns that the price of coffees at cafes in Melbourne has risen by 25 per cent. The Colombian producer's price elasticity of supply of coffee beans is 0.2.

Correct AnswerverifiedShow Answer

The market demand is the average of all of the individual demands for a particular good or service.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The price elasticity of demand for his c...
View Answer

Correct Answer
verified
A given increase in price leads to a sma...
View Answer

Correct Answer
verified

Correct Answer
verified
Advocates of the minimum wage often reco...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Wool prices will be higher and this will...
View Answer

Correct Answer
verified

Correct Answer
verified
Any of the following are acceptable:
a. ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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