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

Elvira decreased her consumption of bananas when the price of peanut butter increased.For Elvira, peanut butter and bananas are

Figure 3.4 -Refer to Figure 3.4.At a price of $10, how many units will be sold?

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all. a.An increase in the number of firms in the market b.An increase in the current price of the product c.A decrease in productivity d.An increase in the expected future price of a product e.A decrease in the price of an input

What is the ceteris paribus condition?

Following the successful launch of Red Bull in the Canadian market in 2004, companies such as Coca Cola, Pepsi, and many others have introduced products to compete with Red Bull.The energy drinks introduced to compete with Red Bull would be considered

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

The demand and supply equations for the apple market are: Demand: P = 12 - 0.01Q Supply: P = 0.02Q Where P= price per bushel, and Q=quantity. A)Calculate the equilibrium price and quantity. B)Suppose the government guaranteed producers a price of $10 per bushel.What would be the effect on quantity supplied? Provide a numerical value. C)By how much would the $10 price change the quantity of apples demanded? Provide a numerical value. D)Would there be a shortage or surplus of apples? E)What is the size of this shortage or surplus? Provide a numerical value.

If the quantity of fishing poles demanded is represented by the equation QD = 60 - P then the corresponding price of fishing poles is represented by the equation

The law of demand implies, holding everything else constant, that

Figure 3.2 -Refer to Figure 3.2.A decrease in the price of the product would be represented by a movement from

Figure 3.6 -Refer to Figure 3.6.The figure above represents the market for canvas tote bags.Assume that the price of tote bags is $15.At this price:

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good. a.The population increases and the price of inputs increase. b.The price of a complement increases and technology advances. c.The number of firms in the market increases and income increases. d.Price is expected to increase in the future. e.Consumer preference increases and the price of a substitute in production decreases.

Buyers rush to purchase stocks in Ontario vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the Ontario wine market as a result of this announcement?

If the price of grapefruit rises, the substitution effect due to the price change will cause

Table 3.3 Demand Supply P=80-QD P=50+1/2QS QD=80-P QS=2P-100 -Refer to Table 3.3.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of producer surplus?

Figure 3.7 -Refer to Figure 3.7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

If a firm expects that the price of its product will be higher in the future than it is today

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?