Question 13 A market maker faces the following demand and supply for widgets. El

Question

Question 13

A market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5. Eleven sellers are also willing to sell at the same prices. If the market maker makes three transactions, what is his total profit?

$18

$21

$12

$15

Question 14

A market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5. Eleven sellers are also willing to sell at the same prices. If the market maker decides to only make one transaction what is his profit/bid-ask margin

$10

$8

$16

$12

Question 15

A market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5. Eleven sellers are also willing to sell at the same prices. How many transactions must the market maker make if he wants to maximize his profits?

1

4

3

2

Question 16

A market maker faces the following demand and supply for widgets. Eleven buyers are willing to buy at the following prices: $15, $14, $13, $12, $11, $10, $9, $8, $7, $6, $5. Eleven sellers are also willing to sell at the same prices. If the market maker is free to choose the number of transactions he can make, what is his maximum profit?

$10

$8

$28

$1

Question 17

After the housing bubble burst, consumer confidence plummeted and housing sales dropped to all-time lows. This caused the demand curve for normal goods to shift

inwards

outwards

stay constant

none of the above

Question 18

An increase in income causes the demand for inferior goods to_____________ and the price of inferior goods to ____________.

Decrease, decrease

Increase; increase

Decrease; increase

Increase; decrease

Question 19

An increase in income causes, the price for ipads _____________ and the quantity demanded for ipads ____________.

Increase; decrease

Decrease; increase

Increase; increase

Decrease, decrease

Question 20

As the income of bus riders increased, the wages of bus drivers increased simultaneously. How does this affect the market for bus rides (inferior good)?

The demand curve will shift to the right; the supply curve will shift to the right

The demand curve will shift to the left; the supply curve will shift to the left

The demand curve will shift to the left; the supply curve will shift to the right

The demand curve will shift to the right; the supply curve will shift to the left

Question 21

If movie theatres decided to increase the price for the movie tickets, holding other factors constant, what would happen to the demand for popcorn in the theatres?

the demand for popcorn would shift to the left because popcorn and movies are complementary goods.

the demand for popcorn would shift to the right because popcorn and movies are complementary goods.

the demand for popcorn would shift to the right because popcorn and movies are substitute goods.

the demand for popcorn would shift to the left because popcorn and movies are substitute goods.

$18

$21

$12

$15

Explanation / Answer

Question 13 to 16 can be better explained by finance experts as it involves bid ask margin.

Answer 17:

Option a. The demand curve shifted inwards as the demand of the normal goods fell due to low consumer spending.

Answer 18:

Option a. The increase in income will lead to fall in the demand for inferior goods. Since the demand of inferior goods will fall, the prices of the inferior goods will also decline.

Answer 19:

Option C. The demand of i pads will increase with the increase in income.

Answer 20:

Option B. Increase in income will lead to fall in the quantity demanded of inferior good. Also, the wages of the bus drivers is increasing which is considered as a factor of production. Thus, the supply will shift leftwards.

Answer 21:

Option A.

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