Exam 4: Supply and Demand: an Initial Look

Equilibrium is reached where there is no inherent force causing quantity supplied or quantity demanded to change.

Air fares are generally lower on Tuesdays and Wednesdays each week.What is a likely explanation for this occurrence?

A change in the price of a good has no effect on the supply schedule.

Normally, when a governmental price control affects the price, it can be expected to result in a

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to quantity of money demanded if the interest rate increases?

A supply schedule can be plotted on a graph to yield a supply curve.

The laws of supply and demand force prices to an equilibrium.

If the demand for steak shifts to the left, a likely reason is that

Technological advances that allow a good to be produced at a lower cost will shift the demand curve rightward.

Professional baseball teams in the United States use only wooden bats.If aluminum bats were permitted, the impact on the wooden bat market would be

Legal limits on prices will tend to cause misallocation of resources because

If the supply curve for housing has the usual positive slope, rent controls are likely to

Rent controls are designed to protect consumers from high rents.

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased.As a result, we can expect

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

Price floors lead to market surpluses.

Any factor that shifts the supply curve inward and to the left and does not affect the demand curve will raise the equilibrium price and reduce the equilibrium quantity.

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

An important assumption made when constructing a demand curve is that

A price above equilibrium always yields a surplus.