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

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

Figure 3.2 -Refer to Figure 3.2.An increase in price of inputs would be represented by a movement from

Prices of BC Merlot wine (assume that this is a normal good)have risen steadily in recent years.Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen.Which of the following best explains the rising prices of BC Merlots?

Market equilibrium occurs where supply equals demand.

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

A change in all of the following variables will change the market demand for a product except

What are the two effects that explain the Law of Demand? Briefly explain each effect.

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point E). Which of the following changes would cause the equilibrium to change to point A?

You are given the following market data for Venus automobiles in Saturnia. Demand: P = 200 - 0.25Q Supply: P = 130 + 0.10Q Where P = Price and Q = Quantity. A)Calculate the equilibrium price and quantity. B)Calculate the consumer surplus in this market. C)Calculate the producer surplus in this market.

In recent years the cost of producing organic produce in Canada has decreased largely due to technological advancement.At the same time, more and more Canadians prefer organic produce over conventional produce.Which of the following best explains the effect of these events in the organic produce market?

In 2011, floods damaged a large portion of the wheat crop in the prairie provinces.As a result of this, many farmers were not able to supply wheat to the market.As a result of the flooding, what would we expect to see in the market for wheat at the original equilibrium price

A movement along the demand curve for toothpaste would be caused by

Nearly a quarter of China's 1.3 billion people are under the age of 15.How will this affect high school enrollment over the next fifteen years? The labour market over the next fifteen years?

When deciding on which new products to develop, a firm must devote people, time, and money to designing a new product.Because any firm has only limited resources, it

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

As baby boomers age we would expect

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

If the quantity of donuts supplied is represented by the equation QS = -15 + 5P then the corresponding price of donuts is represented by the equation

All else equal, an increase in the number of firms producing energy drinks will

The popularity of digital cameras has enticed large discount stores like Walmart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?