CHAPTER FOUR QUESTION POOL Flashcards
Which of the following is NOT an assumption for a perfectly competitive market?
a) No buyer or seller has market power.
b) The firms offer identical products.
c) There are many buyers and sellers.
d) Barriers to entry exist.
D
What is a reason for a movement along the supply curve?
a) A change in the price of an input used to produce the good.
b) A change in the number of sellers.
c) A change in the price of the good.
d) A change in the technology used to produce the good.
C
Consider a perfectly competitive market. The equilibrium price is 12. The equilibrium
quantity is 440. The supply curve is Q (P) = 200 + 20P. Which of the following could be the
demand curve in this market?
a) None of the other answers is correct.
b) Q(P)=500−5P
c) Q(P)=300−10P
d) Q(P)=1000−10P
B
Consider the market for flounders (a sort of fish). The demand function in the northern part of
the country is given by QN(P) = 20−P while that in the southern part is QS(P) = 25−P. The
supply function for the entire country is Q(P) = P. What is the market equilibrium price for
the entire country (i.e., northern and southern part combined)?
a) P=5
b) P=15
c) P=10
d) P=12.5
B
Consider our discussion of perfectly competitive markets in the lecture and in the book. In a
perfectly competitive market…
a) sellers sell differentiated products.
b) sellers have market power.
c) there are no barriers to entry.
d) price and quantity supplied are always negatively related.
C
The Law of Demand states that
a) the quantity demanded of a good decrease as the price increases.
b) the quantity demanded of a commodity is the same for all consumers in a perfectly
competitive market.
c) the demand for a commodity is directly related to consumers’ income, all other things
remaining constant.
d) the demand for a commodity always equals the supply of the commodity.
A
Which of the following factors is expected to cause the demand curve for coffee to shift to the
right?
a) A drop in income for all consumers.
b) A bad harvest in some of the major coffee producing countries.
c) A fall in the manufacturing cost for coffee.
d) A price increase for tea which is a substitute for coffee
D
Consider a perfectly competitive market. The demand curve is Q(P)=100−8P. The supply
curve is Q (P) = 20 + 12P. Which statement is correct?
a) The equilibrium quantity is Q=78.
b) At price P=2, the quantity demanded is42.
c) The equilibrium price is P=5.
d) At price P=5, there is excess supply.
D
Consider a perfectly competitive market for a normal good. The market moves from an initial
equilibrium to a new one in which price and quantity are higher. Which of the following
combinations could have led to the new equilibrium (holding everything else equal)?
a) A decrease in income and an increase in input prices.
b) An increase in the number of sellers and a decrease in input prices.
c) No change in income and a decrease in the number of sellers.
d) An increase in income and no change in input prices.
D
Consider the market for flounders (a sort of fish). The demand curve in the northern part of
the country is given by QN(P)=2000−100P while that in the southern part is
QS(P)=5000−500P. The supply curve for the entire country is Q(P)=20P. What is the market
demand for the entire country (i.e., northern and southern part combined) at a price of P = 11
(round to the nearest integer if needed)?
a) Q=199
b) Q=10
c) Q=900
d) Q=400
C
Which of the following is NOT true for a firm in a perfectly competitive market?
a) It faces a perfectly elastic demand curve.
b) It is unable to influence the market price of the good it sells.
c) It seeks to maximize revenue.
d) Relative to the size of the market, the firm is small.
C
What is a reason for a movement along the demand curve (holding all else equal)?
a) A change in the number of buyers
b) A change in the availability and prices of complements
c) A change in the price of the good
d) None of the other answers is correct
C
Which of the following factors is expected to cause the demand curve for coffee to shift to the
left?
a) A fall in the manufacturing cost for coffee.
b) A price increase for tea which is a substitute for coffee.
c) A drop in income for all consumers.
d) A bad harvest in some of the major coffee producing countries.
C
Consider a perfectly competitive market. The demand curve is Q(P)=100−8P. For which of
the following supply curves is the equilibrium price P = 6?
a) Q(P)=−10+4P
b) Q(P)=−20+12P
c) Q(P)=20+2P
d) Q(P)=−5+12P
B
What is a reason for a movement along the demand curve (holding all else equal)?
a) A change in the price of the good.
b) A change in the number of buyers.
c) A change in the availability and prices of complements.
d) None of the other answers is correct.
A
