Exam 4: Supply and Demand: an Initial Look

Consumers expressed outrage at the high price of chainsaws after Hurricane Andrew hit Florida and Louisiana, with newspaper editorials accusing suppliers of unconscionable price gouging. Use a supply and demand graph to assist in explaining the increase in the price of chain saws after Hurricane Andrew.

Lines, ration coupons, and black markets are byproducts of a

Black markets can generally be eliminated when price ceilings are enacted.

In an attempt to limit the supply of illegal liquor, the Russian government has restricted sugar availability (sugar is used to increase alcohol content). Russians also like to sweeten their tea with jam, another product made using sugar. Which graph in Figure 4-11 depicts the impact of sugar rationing on the Russian tea market?

On a traditional supply and demand diagram,

A common misperception about consumer demand is that

Price supports are a form of price ceiling for agricultural products that lowers prices for consumers and enhances market efficiency.

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

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

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 that

The price for a unit of labor is the wage rate. What happens to the quantity of labor demanded if the wage rate increases?

Assume that Figure 4-4 shows demand for steak. An increase in income of buyers will change demand from

Over the previous year, 2,000 boxes of antihistamine tablets were sold at a price of $20 per box, and during the current year, 2,500 boxes of tablets were sold at $25 a box. The most likely interpretation of these data is that the

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

The supply curve shows

A common misconception about supply is that

Which of the following will shift the demand curve for milk?

Following the devastation of Hurricane Hugo, Charleston, South Carolina was cut off from the outside world and without electricity. Prices for bagged ice rose by 1,000 percent and electric generators by 300 percent and at least one tree removal firm charged $4,000 to cut up a tree. City government responded by passing an emergency law prohibiting price "gouging." This law is an example of

Two studies published in the New England Journal of Medicine link the risk of breast cancer to alcohol consumption. Young women who have nine drinks per week were reportedly 150 percent more likely to develop breast cancer. Considering the market for alcohol, an economist would predict a movement

During the Revolutionary War, the Pennsylvania legislature attempted to aid the Continental Army by setting wage floors for soldiers in the army.