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

Draw a demand curve and label it D1. On the graph, illustrate an increase in demand and a decrease in demand, and label the curves D2 and D3, respectively. Starting on demand curve D₁, explain the shift that would result from each of the following events: a. an increase in income and the good is a normal good b. an increase in income and the good is an inferior good c. a decrease in the price of a substitute good d. a decrease in the price of a complementary good e. an increase in the taste for the good f. a decrease in population g. an increase in the expected future price of the good

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

Figure 3-1 -Refer to Figure 3-1. If the product represented is a normal good, a decrease in income would be represented by a movement from

A decrease in the price of GPS systems will result in

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

An increase in the price of inputs will cause the supply curve for a product to shift to the right.

If a union successfully negotiates for higher wages and benefits for steel workers, what impact would this have on supply and demand in the market for steel, assuming no other changes take place in this market?

Draw a demand curve and label it D1. On the graph, illustrate an increase in demand and a decrease in demand, and label the curves D2 and D3, respectively. Starting on demand curve D₁, explain the shift that would result from each of the following events: a. a decrease in income and the good is a normal good b. a decrease in income and the good is an inferior good c. an increase in the price of a substitute good d. an increase in the price of a complementary good e. a decrease in the taste for the good f. an increase in population g. a decrease in the expected future price of the good

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise?

The Internet has created a new category in the book selling market, namely, the "barely used" book. How does the availability of barely used books affect the market for new books?

Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?

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

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated. a. Swim fins and scuba tanks b. Coca Cola and Volkswagens c. Printers and ink cartridges d. Ice and ice chests e. Heineken and Corona

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

An inferior good is a good for which the quantity demanded increases as the price decreases, holding everything else constant.

If the price of automobiles was to increase, then

If the price of propane-fueled gas grills was to decrease, then

Figure 3-1 -Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement from

In response to a shortage, the market price of a good will rise. As the price rises, the demand will decrease and supply will increase until equilibrium is reached.

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right, but the supply curve shifts more than the demand curve. As a result