Exam 3: Where Prices Come From: the Interaction of Demand and Supply

Shrimp is an increasingly popular part of the American diet. Louisiana shrimpers who represent the bulk of the U.S. industry were almost all put out of business by Hurricane Katrina. How did the hurricane affect the equilibrium price and quantity of shrimp?

A supply curve

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery, and fewer doctors decide to enter the field of joint replacement surgery?

Which of the following would shift the supply curve for MP3 players to the right?

If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until

According to a recent study, "Stricter college alcohol policies, such as raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana." On the basis of this information, how would you describe alcohol and marijuana?

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.

What is the difference between a supply schedule and a supply curve?

Which of the following would cause an increase in the supply of peanut butter?

If a firm expects that the price of its product will be lower in the future than it is today

Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect?

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt. Which panel describes what happens in the market for frozen yogurt when the price of ice cream, a substitute product, increases?

Which of the following has occurred as the millennial generation has come of age?

Discuss the correct and incorrect economic analysis in the following statements. "If a disease kills a large number of turkeys, the supply of turkeys will decrease. This will result in a price increase, which will then cause the supply of turkeys to increase."

A positive technological change will cause the supply of a good to increase.

The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?

The law of demand implies, holding everything else constant, that as the price of gelato

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₂ (point B). Assume that Motorcycles are a normal good. If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good), the equilibrium could move to which point?

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is