Exam 4: Supply and Demand: an Initial Look

At equilibrium, the market will clear, with no surpluses or shortages occurring.

When a demand schedule is drawn as a graph,

When there is an increase in demand,

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

Any event that causes either the demand curve or the supply curve to shift will also change the equilibrium price and quantity.

The supply curve of books (which are produced using paper made from trees) will shift to the left in response to

The interest rate is the price borrowers pay to borrow money.Key interest rates are controlled by the Federal Reserve System.If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to

The demand curve shows graphically how much consumers

Figure 4-4 -Assume that Figure 4-4 shows demand for soda.An increase in the price of bottled water will change demand from

Figure 4-4 -Assume that Figure 4-4 shows demand for skirt steak, which is used to make fajitas.A decrease in the price of tortillas will change demand from

The major drawback of a price ceiling is

-In Figure 4-16, an increase in the number of producers will shift supply from

Even though prices may change frequently, they can be expected to gravitate toward equilibrium.

The laws of supply and demand did not apply to elephant tusks.

In the 1990s, Congress considered an agriculture bill that would gradually reduce price supports for many agricultural products.If the bill were to be approved, what would most likely happen to the number of families employed in agriculture?

A key assumption made when a supply schedule is constructed is that

-Assume that Figure 4-16 shows the supply of steak.An increase in the price of cattle feed will change the supply from

Equilibrium in a market is

Are markets always in equilibrium?

Sugar price supports ensure an abundance of sugar, and hence reasonable prices for consumers.