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Suppose that the demand and supply curves in the market for apples have the following functional form: QD = 250 - 4p and QS = 10 + p.If the prevailing price on the market is 50,then


A) the market exhibits an excess supply of 240 units.
B) the market exhibits an excess demand of 10 units.
C) the market exhibits an excess supply of 10 units.
D) the market is clearing.
E) the market exhibits an excess demand of 240 units.

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The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.  Quantity  Demanded  (millions)   Quantity  Supplied  (millions)   Price ($)   Year 1  Year 2  Year 1  Year 2 308095140125269010513512022100115130115181101251251101412013512010510130145115100\begin{array} { | c | c | c | c | c | c | } \hline & \begin{array} { c } \text { Quantity } \\\text { Demanded } \\\text { (millions) }\end{array} && & \begin{array} { c } \text { Quantity } \\\text { Supplied } \\\text { (millions) }\end{array} & \\\hline \text { Price (\$) } & \text { Year 1 } & \text { Year 2 } & & \text { Year 1 } & \text { Year 2 } \\\hline & & & & & \\\hline 30 & 80 & 95 & & 140 & 125 \\\hline 26 & 90 & 105 & & 135 & 120 \\\hline 22 & 100 & 115 & & 130 & 115 \\\hline 18 & 110 & 125 & & 125 & 110 \\\hline 14 & 120 & 135 & & 120 & 105 \\\hline 10 & 130 & 145 & & 115 & 100 \\\hline\end{array} TABLE 3- 3 -At the market- clearing price for a commodity


A) prices will remain unchanged,even if there is excess demand.
B) there will never again be any pressure for prices to change,independent of what happens to demand or supply.
C) shifts in the supply or demand curves will not cause price changes.
D) the quantity supplied of the commodity equals quantity demanded.
E) there may be excess demand for a product but not excess supply.

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"Demand" in a particular market refers to


A) the quantity that is desired but not satisfied by current supply.
B) the quantity purchased at the current market price.
C) the relationship between demand and supply.
D) only the quantity demanded by households at current market prices.
E) the entire relationship between quantity demanded and price.

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The time period to which quantity demanded refers when constructing demand curves is


A) a period shorter than one year.
B) any specified time period.
C) a moment in time.
D) a long period of time.
E) one year.

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When deriving the market demand curve for a commodity,the only variable(s) that can change is (are) the


A) price of a related commodity.
B) income of consumers.
C) quantity of the commodity demanded.
D) price of the commodity.
E) both C and D.

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E

In a market for a good or service,the quantities demanded and supplied are


A) both stock variables.
B) a flow variable and a stock variable,respectively.
C) both flow variables.
D) neither stock nor flow variables.
E) a stock variable and a flow variable,respectively.

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The market supply curve for wooden shipping crates would shift to the right


A) if the prices of inputs fall.
B) if a government subsidy for shipping crates is withdrawn.
C) if suppliers leave the industry.
D) if technological conditions for the production of crates deteriorates.
E) if a tax is applied to shipping crates.

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A

Suppose the demand curves for goods A,B,and C have the following functional forms,where Q denotes quantity demanded,P denotes price,and M denotes income: QA = 120 - 3.5PA - 6PB + 14M QB= 100 - 2PB + 3PC + 1.1M QC = 1500 - 0.5PC - 300M. Based on these demand curves,which of the following goods are known to be inferior goods?


A) A
B) B
C) C
D) A and B only
E) A,B and C

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A variable that is a "stock"


A) is used only in accounting.
B) has only to do with products where inventory is kept.
C) is measured per unit of time.
D) has the same units as a flow variable.
E) has meaning only at a point in time.

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Ceteris paribus means


A) and so forth.
B) other things being equal.
C) in a historical context.
D) knowledge gained before the study of evidence is made.
E) among other things.

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Which statement best describes a "demand schedule"?


A) an abstract concept underlying the graph of a demand curve
B) a graph showing the inverse relationship between quantity demanded and price
C) a timetable showing the quantity demanded at different time periods
D) a numerical tabulation showing the quantities demanded at various prices
E) a functional statement of the demand relationship

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A change in demand is said to take place when there is a


A) shift of the supply curve.
B) quantity change.
C) shift of the demand curve.
D) price change.
E) movement along the demand curve.

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A normal good is one


A) for which demand varies directly with household income.
B) for which demand does not vary with household income.
C) for which demand varies inversely with household income.
D) that normal people consume.
E) that everyone normally consumes.

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A

A demand curve is a representation of the relationship,ceteris paribus,between quantity demanded and


A) income.
B) preferences.
C) wealth.
D) price.
E) supply.

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"Excess demand" can also be described as


A) quantity demanded exceeding quantity supplied.
B) excess supply.
C) the area to the right of the equilibrium price on a supply and demand diagram.
D) quantity supplied exceeding quantity demanded.
E) the area to the left of the equilibrium price on a supply and demand diagram.

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Aeronautical engineers are a factor of production for airplanes.What will happen in the world market for airplanes when there is a worldwide shortage of aeronautical engineers?


A) price will decrease,quantity exchanged will decrease
B) price will decrease,quantity exchanged will increase
C) price will increase,quantity exchanged will decrease
D) price will increase,quantity exchanged will increase
E) there will be no change in price or quantity exchanged

Correct Answer

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Which of the following pairs of goods are likely to be substitutes for a large group of consumers?


A) green beans and peas
B) wieners and buns
C) pancakes and syrup
D) eggs and toast
E) coffee and cream

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Which statement best describes the "law of demand"? Other things being equal,the quantity of tennis rackets demanded will be greater if the


A) price of tennis rackets is lower.
B) incomes of tennis players are higher.
C) number of tennis players is higher.
D) price of badminton rackets is higher.
E) demand for tennis rackets rises.

Correct Answer

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The table below displays hypothetical demand and supply schedules for the market for overnight parcel deliveries in Canada.  Quantity  Demanded  (millions)   Quantity  Supplied  (millions)   Price ($)   Year 1  Year 2  Year 1  Year 2 308095140125269010513512022100115130115181101251251101412013512010510130145115100\begin{array} { | c | c | c | c | c | c | } \hline & \begin{array} { c } \text { Quantity } \\\text { Demanded } \\\text { (millions) }\end{array} && & \begin{array} { c } \text { Quantity } \\\text { Supplied } \\\text { (millions) }\end{array} & \\\hline \text { Price (\$) } & \text { Year 1 } & \text { Year 2 } & & \text { Year 1 } & \text { Year 2 } \\\hline & & & & & \\\hline 30 & 80 & 95 & & 140 & 125 \\\hline 26 & 90 & 105 & & 135 & 120 \\\hline 22 & 100 & 115 & & 130 & 115 \\\hline 18 & 110 & 125 & & 125 & 110 \\\hline 14 & 120 & 135 & & 120 & 105 \\\hline 10 & 130 & 145 & & 115 & 100 \\\hline\end{array} TABLE 3- 3 -Refer to Table 3- 3.Suppose the price of overnight parcel delivery in Year 1 is $22.Which of the following statements is correct? In Year 1


A) there is an excess demand of 30 million deliveries.
B) 115 million parcels will be delivered.
C) there is an excess supply of 15 million deliveries.
D) there is an excess supply of 30 million deliveries.
E) there is an excess demand of 15 million deliveries.

Correct Answer

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Suppose that many coal mines are shut for environmental reasons.This will cause


A) no change in the supply curve,only a change in price.
B) an increase in the supply of coal (a rightward shift of the supply curve) .
C) a movement down the supply curve.
D) a decrease in the supply of coal (a leftward shift of the supply curve) .
E) a movement up the supply curve.

Correct Answer

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