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

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 D₂ and S₂ (point E). If the technology to produce motorcycles improves and the number of buyers increases, how will the equilibrium point change?

Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower levels of bad cholesterol?

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

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

Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease?

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

In January, buyers of gold expect that the price of gold will fall in February. What happens in the gold market in January, holding everything else constant?

Figure 3-5 -Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated by

A decrease in the number of firms in a market will cause supply to increase.

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

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 in the market for sustainable tourism as a result of these two factors?

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

The market for smart water is becoming more competitive. The increase in competition in this market is an example of how the market responds to

A change in supply is represented by a shift of the supply curve.

Figure 3-5 -Refer to Figure 3-5. In a free market such as that depicted above, a shortage is eliminated by

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A). If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

Figure 3-1 -Refer to Figure 3-1. An increase in the price of the product would be represented by a movement from

If virtual reality headsets are considered substitutes for game consoles, an increase in the price of virtual reality headsets would, all else equal,

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 less than the demand curve. As a result

A surplus occurs when the actual selling price is above the market equilibrium price.