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

Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

The income effect explains why there is usually a direct relationship between the price of product and the quantity of the product demanded.

Figure 3-2 -Refer to Figure 3-2. A decrease in the price of substitutes in production would be represented by a movement from

A normal good is a good for which the demanded decreases as income decreases, holding everything else constant.

If the price of peaches, a substitute for plums, increases the demand for plums will decrease.

Figure 3-4 -Refer to Figure 3-4. If the current market price is $10, the market will achieve equilibrium through

Article Summary World Tourism Day 2017, with its official celebration on September 27 in Qatar, was focused on sustainable tourism. Established by the United Nations World Tourism Organization (UNWTO), World Tourism Day has been celebrated since 1980, and the theme for 2017 was the "International Year of Sustainable Tourism for Development". The event was designed with two sessions: one focused on 'Tourism as a driver of economic growth', and the other 'Tourism and the Planet: committed to a greener future'. With over 1.2 billion travellers crossing international borders in 2016, and that number expected to grow to 1.8 billion by 2030, sustainable tourism is viewed by many as an important catalyst for diversification and economic growth. Source: Vicky Karantzavelou, " World Tourism Day 2017 celebrated on the theme Sustainable Tourism — a Tool for Development," traveldailynews.com, August 14, 2017 -Refer to the Article Summary. Assume that more global tourist destinations begin to offer and publicize sustainable tourism to American tourists and, due to the growing number of millennials attracted to sustainability, more Americans choose to embrace sustainable tourism. All else equal, what will happen to the equilibrium price and equilibrium quantity in the market for sustainable tourism as a result of these two factors?

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase?

If the amount of carbonated sodas consumed continues to decline as consumers continue to choose to buy healthier products, this will likely

If the demand for a product increases and the supply of the same product decreases, the equilibrium price will increase.

Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced

In a perfectly competitive market, there are ________ buyers and ________ sellers.

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for rice. What happens in this market if buyers expect the price of rice to fall?

Assume that the price for lawn care has fallen and sales of lawn care services have also fallen. One can conclude that

Figure 3-6 -Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the market price is $21. Which of the following statement is true?

A supply schedule

Holding everything else constant, a decrease in the price of bicycles will result in

A surplus occurs when the market price is lower than the equilibrium price.