Exam 4: Supply and Demand: an Initial Look

When there is a decrease in demand,

An increase in demand will have what effect on equilibrium price and quantity?

If the demand curve shifts outward and the supply curve remains the same, price will fall.

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

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

Scalpers (people selling tickets at a price above the stated price, P*)were spotted at this year's Super Bowl game.  This suggest that

Falling oil prices meant that consumers in Libya could afford fewer imported goods. The Libyan government imposed controls to limit imports of cigarettes. At one point, the market price of a carton of cigarettes rose to $70. Which graph in Figure 4-22 best depicts this situation?

If the supply curve for housing has the usual positive slope, rent controls are likely to

"Moonshine" is illegally produced liquor and the production process adds sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. When the price of sugar tripled, the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 4-9 best illustrates this?

Which of the following will tend to occur if price floors are imposed on a product?

One motive for "battling the invisible hand" is

If the price of hamburger rises, we would expect the demand for steak to shift to the right.

The demand by sterile couples for babies to adopt has grown rapidly, while the supply has dwindled because of improved contraception, liberal abortion laws, and an increase in the probability that unwed mothers will keep their children. It violates the law to sell human beings at any age, but for every 20 legal adoptions, there seemingly is one baby sale at a price up to $50,000. The generic term economists apply to the market produced by this type of shortage is

Which price in Figure 4-21 is equilibrium?

Define the following terms and explain their importance to the study of economics. A.Demand b.Surplus c. Equilibrium d. Law of supply and demand e.Quantity demanded

The change in the amount of a good purchased after a shift of the supply curve depends on

Which of the following would result in an increase in the demand for Toyota automobiles?

An increase in price will decrease demand.

Distinguish between scarcity and shortage.

Throughout history, governments have used price controls to