Exam 4: Supply and Demand: an Initial Look

Define equilibrium as it relates to markets. Describe the process by which a market reaches a new equilibrium. Include an appropriate diagram.

In an attempt to reduce poaching of elephant tusks for ivory, officials in Kenya burned illegally gathered ivory. Economists tend to point out that

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

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.

Which of the following is the correct way to describe equilibrium in a market?

A severe freeze has damaged the Florida orange crop. The effect on the market for oranges will be a left shift of

Figure 4-23   In Figure 4-23, which of the following movements would be caused by a change in income?

What is the economic reasoning behind the proposal to legalize drugs?

A change in the price of important inputs will change the quantity supplied but will not shift the supply curve.

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 the supply of money (to lend) if the interest rate increases?

When the price per ticket is P*, there are empty seats at a university's basketball arena. From this, we can conclude that

When used in a professional or technical sense, the law of supply and demand refers to

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

Which of the following is an example of the effect of a price floor?

In January, 2,500 quarts of ice cream are sold in Boston at $2.50 a quart. In February, 3,000 quarts are sold at $2.00 a quart. This change in quantity sold and price may have been caused by

In 1971, the U.S. government banned cigarette advertising on radio and television. After the ban was imposed, an economist would predict that the price of magazine ads would

If an increase in income leads to an increase in the demand curve for sailboats, this will lead to

What are the major problems that will tend to arise if there are legal limits on the movement of prices?

Economists emphasize the importance of ____ in analyzing demand.

Last year, 1,000 cases of cough syrup were sold at $10; this year, 1,200 cases were sold at $12. The most probable interpretation of these data is that the