Exam 4: Supply and Demand: an Initial Look

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

Rent controls and controls on other prices often aggravate the very problem they are intended to solve.

In 1966, the Catholic Church eliminated the centuries-old requirement that members abstain from eating meat on Fridays. Catholics customarily ate fish on Friday. Given this, economics would predict that

A demand curve can be thought of as

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.

The demand curve shows graphically how much consumers

Computer processors and memory costs have decreased dramatically in the past 25 years. As a result, in the computer market, we have seen

In Figure 4-18, there would be a surplus of T-shirts if the price were

After Hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators, and bottled water. If governments followed the consumers' demands and imposed price ceilings in these markets, what is the likely result?

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.

When the market price is above equilibrium then ____ and when the market price is below equilibrium, then ____.

An important assumption made when constructing a demand curve is that

Drawing the supply curve and the demand curve on the same graph helps show how price is determined.

Figure 4-4   In Figure 4-4, an increase in population will change demand from

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

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

The most basic investigative tool of economics is the

Families are having more children than families did 15 years earlier. As a result, families have more trouble finding baby-sitters and are shocked at the cost of child care. Which graph in Figure 4-8 best illustrates how the situation has changed?

If the U.S. government starts to sell off its stockpile of cheese,

We observe that the price of food rises and the quantity purchased also rises. This means the