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

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplied will decrease until equilibrium is reached.

Table 3-3 -Refer to Table 3-3. The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market. At a price of $4, the quantity demanded in the market would be

If in the market for oranges the supply has increased, then

Several studies have shown promising links between green tea consumption and cancer prevention. How does this affect the market for green tea?

What is the difference between a "change in demand" and a "change in quantity demanded"?

Table 3-2 -Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. If the price of caviar falls from $45 to $35, the market quantity demanded would

If the price of a product is expected to increase in the future, the supply today will increase.

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good. a. The population decreases and productivity increases b. Income increases and the price of inputs increase c. The number of firms in the market decreases and income decreases d. Consumer preference decreases and the price of a complement increases e. The price of a substitute in consumption increases and the price of a substitute in production increases

An decrease in quantity supplied is represented by a leftward shift of the supply curve.

Explain the difference between a normal good and an inferior good.

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for blu-ray discs. Which panel best describes what happens in this market if there is a substantial increase in the price of blu-ray players?

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. What panel describes what happens in this market when the price of bratwurst falls?

Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?

How does the increasing use of MP3 players affect the market for compact discs?

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

Suppose the cost of growing organic corn has risen at the same time as consumer preference for organic corn has fallen. In the market for organic corn, this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

Holding everything else constant, an increase in the price of MP3 players will result in

Select the phrase that correctly completes the following statement. "A decrease in the expected future price caused an increase in the supply of smartphones. As a result

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is