Exam 4: Supply and Demand an Initial Look

Figure 4-8 -Women today are having more babies than women did fifteen years ago.The result is that mothers today have trouble finding baby-sitters and are shocked at what they must pay for child care.Which graph in Figure 4-8 best illustrates how the situation has changed?

Tampering with the price mechanism

Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist.Why does this occur?

A change in the income of buyers will normally change demand.

Why does quantity demanded decrease when price increases?

Price controls are usually enacted in response to

Figure 4-20 -If there are empty seats at the university basketball game when the price per ticket is P*, then this situation can best be represented by which graph in Figure 4-20?

A demand schedule shows the time over which different quantities will be demanded.

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

As price increases, additional suppliers are willing to produce a commodity.

A cold winter will increase the quantity of heating fuel demanded at every price.

The quantity of Blu-Ray players purchased declined in spite of a decline in price.This implies that the

We observed that the price of a good rises and the quantity purchased also rises.Everything else being equal, it is consistent that

Figure 4-21 -A surplus will tend to occur at which price in Figure 4-21?

A supply curve slopes upward because quantity supplied is higher when price is higher.

Which of the following would cause an increase in demand for Toyota automobiles?

Figure 4-13 -The drug BGH (bovine growth hormone) dramatically increases the milk output of dairy cows.Farmers in Wisconsin, a big dairy state, vigorously oppose licensing the drug, fearing that excess supply and a consumer reaction on the purity of food issue will put many of them out of business.Which graph in Figure 4-13 best illustrates the farmers' fears?

Assume a new technology further reduces the cost of producing calculators.Also assume that consumers have cut back on their scheduled purchases in anticipation of even more cost-saving developments.As a result, we can expect

Rent controls are designed to protect consumers from high rents.

The U.S.government banned cigarette advertising on radio and television after January, 1971.You would expect to find that after the ban took effect the price of magazine ads for