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

Which of the following is evidence of a shortage of chocolate?

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

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will rise.

The income effect explains why there is an inverse relationship between the price of a product and the quantity of the product demanded.

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

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 D₁ and S₂ (point B) Which of the following changes would cause the equilibrium to change to point C?

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 D₁ and S₁ (point A)If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

If the number of firms producing electric cars increases and consumer preference for electric cars increases,the equilibrium quantity of electric cars will definitely increase.

What is the difference between a supply schedule and a supply curve?

For each of the following pairs of products state which are complements,which are substitutes,and which are unrelated. a.House plants and potato chips b.Eyeglasses and contact lenses c.Motorcycles and gasoline d.Smartphone and smartphone apps e.Red wine and white wine

Use the following supply schedule for cherries to draw a graph of the supply curve.Be sure to label the supply curve and each axis,and show each point on the supply curve. Price (dollars per bushel) Quantity (thausands af bushels) 4 25 8 50 12 75 16 100 20 125

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statement is true?

Suppose that when the price of oranges decreases,the Sarita decreases her purchases of peaches.To Sarita

For each of the following pairs of products state which are complements,which are substitutes,and which are unrelated. a.Blu-ray discs and video-on-demand b.Fiat 500 and Mini Cooper S c.Toothpaste and toothbrush d.Popcorn and snowboards e.Razors and razor blades

"Because chips and salsa are complements,an increase in the price of chips will cause the demand for salsa to decrease.This initial shift in demand for chips results in a higher price for chips; this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for coffee.What happens in this market if buyers expect the price of coffee to rise?

If the population increases and input prices decrease,the equilibrium quantity of a product will definitely increase.

Prices of microbrewery beer (assume that this is a normal good)have risen steadily in recent years.Over this same period,prices for fermenting vats used in beer making have also risen and consumer incomes have fallen.Which of the following best explains the rising prices of microbrewery beer?

The cost of producing cigarettes in the U.S.has increased and at the same time,more and more Americans are choosing to not smoke cigarettes.Which of the following best explains the effect of these events in the cigarette market?

Peanut butter and jelly are complements.If the price of peanut butter increases,the demand for jelly will increase.