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

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good)to decrease?

In response to a shortage the market price of a good will rise; as the price rises,the demand will decrease and supply will increase until equilibrium is reached.

The substitution effect of a price change refers to

If consumers believe the price of LCD televisions will decrease in the future,this will cause the demand for LCD televisions to increase now.

If the United States placed an embargo on Swedish products,what would happen in the U.S.market for Swedish furniture?

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.

What is the ceteris paribus condition?

Assume that both the demand curve and the supply curve for DVD players shift to the left but the demand curve shifts more than the supply curve.As a result

If the price of refillable butane lighters was to decrease,then

Which of the following would shift the supply curve for energy drinks to the left?

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 price of an input b.An increase in productivity c.An increase in the price of a substitute in production d.A decrease in the expected future price of a product e.A decrease in the current price of the product

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

Suppose that when the price of raspberries increases,Lonnie increases his purchases of papayas.To Lonnie

What are the five most important variables that shift the market supply curve?

If a firm has an incentive to increase supply now and decrease supply in the future,the firm expects that the

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

If the price of automobiles was to increase,then

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

Which of the following statements is true?

The substitution effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.