Exam 4: Supply and Demand: An Initial Look

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.

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?

Distinguish the terms price ceiling and price floor.

Price ceilings are designed to protect sellers,while price floors are designed to protect buyers.

The price for labor is the wage rate.What happens to the quantity of labor supplied if wages increase?

At an equilibrium price,quantity demanded

An increase in consumer income will shift both the supply and demand curves.

When a demand schedule is drawn as a graph,

An increase in the price of poultry would lead to

Even though prices may change frequently,they can be expected to gravitate toward equilibrium.

The supply curve shows

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

A demand schedule shows the time over which different quantities will be demanded.

An important assumption that is made when constructing a demand schedule is that

If price rises,what happens to demand for a product?

An increase in price will decrease demand.

Figure 4-13 -The drug BGH (bovine growth hormone)dramatically increases the milk output of dairy cows.Farmers in Wisconsin,a big dairy state,vigorously oppose licensing the drug,fearing that excess supply and a consumer reaction on the purity of food issue will put many of them out of business.Which graph in Figure 4-13 best illustrates the farmers' fears?

In early 1996,Congress proposed an agriculture bill that would gradually reduce price supports for many agricultural products.If the bill were to be approved,what would most likely happen to the number of families employed in agriculture?

Along a supply curve,

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