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

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

Figure 3.1 -Refer to Figure 3.1. An increase in population would be represented by a movement from:

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

The market price for a product will fall when there is a surplus until:

Figure 3.4 -Refer to Figure 3.4. If the current market price is $15, the market will achieve equilibrium by:

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 _____________________________________________________________________________________________ _____________________________________________________________________________________________

If the demand for higher education increases as incomes increase, then higher education is:

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 S₁ (point C). Which of the following changes would cause the equilibrium to change to point B?

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 _____________________________________________________________________________________________ _____________________________________________________________________________________________

Assume that both the demand curve and the supply curve for tablet computers shift to the right, but the supply curve shifts more than the demand curve. As a result:

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

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 3.8 -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 3.4 -Refer to Figure 3.4. How many units will be sold at the equilibrium price?

What is the 'law of supply'? What does this law imply about the shape of the supply curve? _____________________________________________________________________________________________ _____________________________________________________________________________________________

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Which of the following would cause an increase in the supply of cheese?

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 statements is true?

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

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?