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

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

A decrease in the price of inputs will cause the supply curve for a product to shift to the right.

Select the phrase that correctly completes the following statement."An increase in input prices caused a decrease in the supply of baseballs.As a result

Figure 3-5 -Refer to Figure 3-5.At a price of $0

Table 3-3 Kona Coffee Priceper lb. (dollars) Luke's Quantity Demanded (lb.) Ravi's Quantity Demanded (lb.) Rest of Market Quantity Demanded (lb.) Market Quantity Demanded (lb.) \ 10 3 0 23 8 9 3 32 6 14 7 68 5 18 12 85 4 22 18 110 -Refer to Table 3-3.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee rises from $4 to $5,the market quantity demanded would

Figure 3-4 -Refer to Figure 3-4.At a price of $10,how many units will be sold?

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

Figure 3-1 -Refer to Figure 3-1.A decrease in the price of the product would be represented by a movement from

"The price of digital cameras fell because of improvements in production technology.As a result,the demand for non-digital cameras decreased.This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell the demand for non-digital cameras decreased even further." Evaluate this statement.

Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

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.

If you are considering buying either an Apple iPhone or a Samsung Galaxy,and you choose the Samsung only because the price is lower,then you consider

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen.One can conclude that

An increase in population results in an increase in demand.

Draw a demand curve and label it D1.On the graph,illustrate an increase in demand and a decrease in demand,and label the curves D2 and D3,respectively.Starting on demand curve D₁,explain the shift that would result from each of the following events: a.an increase in income and the good is a normal good b.an increase in income and the good is an inferior good c.a decrease in the price of a substitute good d.a decrease in the price of a complementary good e.an increase in the taste for the good f.a decrease in population g.an increase in the expected future price of the good

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.

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

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for coffee grinders.Compare the conditions in the market when the price is $15 and when the price is $21.Which of the following describes how the market differs at these prices?

The market for smart phones has grown rapidly over the past few years,due in part to the overwhelming success of the Apple iPhone.Following the successful launch of the iPhone in 2007,companies such as Samsung,HTC,and LG have all introduced products to compete with the iPhone.The smart phones introduced to compete with the iPhone would be considered

Suppose that when the price of strawberries decreases,Simone increases her purchase of whipped cream.To Simone