Exam 4: Supply and Demand an Initial Look

Suppose that in a free market 2,000 patients purchase an operation to receive an artificial heart at a price of $500,000 per operation.Without the heart, each patient will die.The government decides this price is too high and imposes a maximum price of $200,000.Everything else equal,

Each point on the demand curve is

Are markets always in equilibrium?

A demand curve can be thought of as

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

At an equilibrium price, quantity demanded

The quantity of goods exchanged in a market will be below the equilibrium quantity

A common misconception about supply is that

How do legal controls on prices lead to corruption?

A decrease in supply will have what effect on equilibrium price and quantity?

During the American Revolution, Washington's army nearly starved to death after price controls were enacted to "help" buy food for the army at affordable prices.The Continental Congress later passed a law which

Change in the price of a good causes the demand schedule for that good to shift.

Price floors are only effective below the market equilibrium.

While demand shifts have an effect on equilibrium price and quantity, supply shifts have no such effect.

Normally, to the extent that a governmental control mechanism succeeds in affecting price, it can be expected to lead to a corresponding

The price for labor is the wage rate.What happens to the quantity of labor supplied if wages increase?

An increase in supply will have what effect on equilibrium price and quantity?

Which of the following suggests that the "laws" of supply and demand are being disobeyed?

When there is an increase in demand,

Who tends to benefit from the sugar price supports?