Exam 2: The Basics of Supply and Demand

Figure 2.1.2 -Refer to Figure 2.1.2. The price of coffee is currently $6.00. and quantity demanded is 7 million pounds. Then there is a notable increase in the preference for coffee over other substitutes, like tea. Which move best describes this change?

Which of the following represents the income elasticity of demand?

Figure 2.5.6 -In order to fit linear supply and demand curves to data, we need to find the parameters, a, b, c, and d, of the corresponding functions. One procedure for finding those values uses the known values of:

The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:

Figure 2.5.3 -An industry in which sales tend to magnify cyclical changes in gross domestic product and national income is called:

The price elasticity of supply refers to:

If two goods are substitutes, the cross-price elasticity of demand must be:

Figure 2.6.2 -When demand is written as Q = a - bP, and P* and Q* are the equilibrium values for price and quantity, which of the following is the value of the price elasticity of demand, E_D?

Suppose the equilibrium price of milk is $3 per gallon but the federal government sets the market price at $4 per gallon. The market mechanism will force the milk price back down to $3 per gallon unless the government:

Figure 2.1.1 -Refer to Figure 2.1.1 above. Lower material costs-indeed lower costs of any kind-make production more profitable. Starting at point A, which of the following best represents this assertion?

Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes:

Figure 2.4.2 -Refer to Figure 2.4.2 above. Fill in the blanks. For any price higher than P*, the quantity demanded ________, while for any price lower than P*, the quantity demanded ________.

Figure 2.5.2 -Refer to Figure 2.5.2 above. Which of the following best represents the demand for cars in the short run (SR) and in the long run (LR)?

Figure 2.4.1 -Refer to Figure 2.4.1. Between points E and F, demand is:

Figure 2.2.1 -Refer to Figure 2.2.1 above. At a price of $1.50, there is:

Figure 2.3.2 -Figure 2.3.2 above is a reproduction of Figure 2.9 in the textbook, which describes the market for mineral resources across time. The downward-sloping line that crosses the equilibrium points is called:

Figure 2.5.5 -Refer to Figure 2.5.5 above. The textbook attributes the changes in the price of coffee in New York to:

If the actual price were below the equilibrium price in the market for bread, a:

When the government controls the price of a product, causing the market price to be above the free market equilibrium price,

Figure 2.1.1 -Refer to Figure 2.1.1 above. Starting from point A, how do the firms in the market react when the price of coffee increases from $6.00 to $7.50 per pound?