Exam 4: Supply and Demand: an Initial Look

In the late 1980s, some medical authorities announced that an acne medication named Retin-A had previously unknown wrinkle-reducing properties. An economist would predict that, following this announcement, the price of Retin-A ____ and the quantity sold __ .

How does rent control tend to cause persistent imbalances in the market for housing?

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

Rent controls encourage investment in housing because they bring stability to the market.

If we observe a market where the quantity supplied exceeds the quantity demanded, but the market price does not fall, then one explanation for this observation is

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

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

The demand curve is constructed with a

Draw a graph of a market in equilibrium. Describe what might cause a change in demand or supply and how this would affect the diagram. Indicate how the equilibrium price and quantity will change.

Assuming that resources are specialized, the opportunity cost of an item increases as the production of it rises. This implies that firms will produce more as

If orange juice prices double next year, there will be a

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

The major drawback of a price ceiling is

At an equilibrium price, quantity demanded

As the general population has aged, there has been an increase in the number of nursing homes, community health facilities along with the development of home care facilities.  All of these factors have produced an increase in the demand for nurses. Simultaneously, improved job opportunities for women other fields have reduced the supply of nurses. Despite these factors, hospitals, the major employers of nurses, have resisted wage increases. The resulting situation can be described as

If the price of coal, a close substitute for oil, decreases, then the

The silverware industry has been in serious decline since the 1980s. Family dining habits are less formal so people purchase less silverware. More recently, the price of silver jumped from $5 to $20 per ounce. Which graph in Figure 4-12 best illustrates these developments?

Show graphically the effect of technological advance on the price of music downloads. In a separate graph, show what happens to the price of CDs as a secondary effect of the new download technology.

An increase in the price of poultry would lead to

Price floors set a legal minimum price on a product or commodity.