EABD - chapter 2

1. 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
a. shortage of 30 units.
b. shortage of 15 units.
c. surplus of 30 units.
d. surplus of 12 units

• A

• B

• C

• D

2. Which of the following pairs of goods are probably complements?
a. Televisions and roller skates.
b. Frozen yogurt and ice cream.
c. Steak and chicken.
d. Hamburgers and ketchup.

• A

• B

• C

• D

3. Suppose the demand for good X is given by Qdx = 10 ‐ 2Px + Py + M. The price of good X is
$1, the price of good Y is $10, and income is $100. Given these prices and income, how
much of good X will be purchased?
a. 115.
b. 515.
c. 1,000.
d. None of the statements associated with this question are correct

• A

• B

• C

• D

4. Suppose market demand and supply are given by Qd = 100 ‐ 2P and QS = 5 + 3P. The
equilibrium price is:
a. $15.
b. $19.
c. $17.
d. $20.

• A

• B

• C

• D

5. Suppose that supply increases and demand decreases. What effect will this have on price
and quantity?
a. Price will increase and quantity may rise or fall.
b. Price will decrease and quantity will increase.
c. Price will decrease and quantity will decrease.
d. None of the statements associated with this question are correct.

• A

• B

• C

• D

6. Which of the following are least likely to be substitutes?
a. Chicken and beef.
b. Cars and trucks.
c. Automobile and housing.
d. Automobile and gasoline.

• A

• B

• C

• D

7. Good X is a normal good and its demand is given by Qxd = α0 + αXPX + αYPY + αMM + αHH.
Then we know that
a. αH > 0.
b. αX > 0.
c. αY > 0.
d. αM > 0

• A

• B

• C

• D

8. If the price of an input rises, producers are willing to produce
a. more output at each given price.
b. less output at each given price.
c. the same output at each given price.
d. none of the statements associated with this question are correct.

• A

• B

• C

• D

9. When quantity demanded exceeds quantity supplied
a. there exists a surplus of a good.
b. the price tends to fall.
c. the price is below the equilibrium price.
d. there is no excess demand

• A

• B

• C

• D

10. Suppose the market demand for good X is given by QXd = 20 ‐ 2PX. If the equilibrium price
of X is $5 per unit then consumers' expenditure on X is
a. $5.
b. $25.
c. $50.
d. cannot be determined from the information contained in the question.

• A

• B

• C

• D