Exam 3: Where Prices Come From: The Interaction of Demand and Supply

Arabian styles and designs are steadily influencing Western fashion and many famous designers are integrating Arabic styles into their wardrobes

Starting in the 1960s researchers predicted that flat -screen televisions produced with liquid display crystal displays (LCD would be sold to the public. But technical problems delayed the manufacture and sale of LCD televisions until the late 1990s. What was this technical problem?

In 2002, Apple decided not to develop and sell a "tablet PC" N a laptop with a special screen that can convert handwriting into text. According to one Apple executive, the tablet PC project was not consistent with Apple's theory for success. What is this theory?

-Refer to Figure 3 -4. The figure above represents the market for canvas tote bags. Assume that the market price is US$35. Which of the following statement is true?

Although it is a popular product, Apple makes little profit from each song downloaded through iTunes. Why does Apple charge only US$0.99 to download a song?

Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?

In Saudi Arabia, the price of chicken is typically lower in the winter than in the summer. Which of the following explanations for this difference is given in the textbook?

Consider the collectors' market for first editions of two popular children's books, Harry Potter and the Order of the Phoenix by J. K. Rowling and Ruby in the Smoke by Philip Pullman. Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel. a. On one large diagram, draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke. b. Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel, even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke. c. Provide a written explanation to accompany your graphical illustration.

-Refer to Figure 3-6. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A). If there is a shortage of apples how will the equilibrium point change?

Research suggests that supermarkets should consider which of the following when deciding whether to remove slow -selling goods from their shelves?

New technology developed in 1999 resulted in a reduction in the cost of manufacturing flat -screen televisions that used liquid crystal displays (LCD). How did this change in technology affect the market for flat -screen televisions?

-Refer to Figure 3 -1. The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings, and the market for designer jeans. Which graph most likely represents which market?

According to the Australian Wool Innovation, severe drought conditions in Australia contributed to the lowest level of wool production in 50 years. This record low production has driven up prices sharply in Australian wool markets. Meanwhile, the price of raw cotton increased significantly for the first time in many years. a. Illustrate this observation with one demand and supply graph for the market for Australian wool and another demand and supply graph for raw cotton. b. Make sure that your graphs clearly show (1) the initial equilibrium before the decrease in the supply of Australian wool and (2) the final equilibrium. c. Use arrows to indicate any shifts in the demand and supply curves for each market. d. Label your graphs fully and write an explanation of your work.

-Refer to Figure 3-6. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A). If there is an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples, the equilibrium could move to which point?

-Refer to Figure 3 -4. The figure above represents the market for canvas bags. Assume that the price o bags is US$15. At this price

Fluctuations in the prices of oil are the result of two important forces:

Mazin subscribes to a monthly pest control service for his home. Last week the owner of the service informed Mazin that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips. How is the market for pest control services affected by this?

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that are both used in the jewellery industry. Which of the following describes the prices of the two materials?

In 2002, Apple decided not to develop and sell a "tablet PC" N a laptop with a special screen that can convert handwriting into text. Which of the following is a reason why Apple chose not to develop a tablet PC?