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

An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise. Holding everything else constant, how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles)?

The following appeared in a Florida newspaper a week after a hurricane hit the state. "Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?

A decrease in the equilibrium price for a product will result

Assume that microbrewery beer is a normal good. Prices of microbrewery beer have risen steadily in recent years. Over this same period, prices for fermenting vats used in beer making have also risen and consumer incomes have fallen. Which of the following best explains the rising prices of microbrewery beer?

Figure 3-4 -Refer to Figure 3-4. At a price of $20, how many units will be supplied?

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated. a. Digital camera and memory card b. 7Up and Mountain Dew c. Swimsuits and flip-flops d. Tylenol and cat food e. Photocopier and paper

What is a surplus? What is a shortage?

If a demand curve shifts to the left, then

How does the decreasing use of traditional cameras affect the market for traditional camera film?

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market?

An increase in the price of off-road vehicles will result in

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. At a price of $55, the quantity demanded in the market would be

How has the growing popularity of factory outlet stores affected the market for clothing at retail department stores?

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 $6, the quantity demanded in the market would be

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 S₁ (point C). If the price of motorcycle side cars (a complement to motorcycles) decreases, and the wages of motorcycle workers increase, how will the equilibrium point change?

Explain the differences between a change in supply and a change in quantity supplied.

A change in quantity supplied is represented by a movement along the supply curve.

Figure 3-3 -Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans. Which graph most likely represents which market?