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

If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until

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?

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

Discuss the correct and incorrect economic analysis in the following statement. "The United Auto Workers Union has successfully negotiated a 9 percent increase in wages for its workers.This increase in the wage rate causes an increase in demand for automobiles, since many consumers now have greater incomes, and also a decrease in the supply of automobiles because the cost of production has increased.These effects cancel each other out resulting in no change in equilibrium price and quantity in the automobile market."

The supply curve for watches

Holding everything else constant, an increase in the price of MP3 players will result in

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

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

Orange juice drinkers want to consume more orange juice at a lower price.Which of the following events would have this effect?

A surplus occurs when the actual selling price is above the market equilibrium price.

A growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S.market.How has this affected the equilibrium price and quantity of cigars?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true, and favorable weather has increased the grape harvest of California vineyards.In the market for red wine, these two developments would

The demand by all the consumers of a given good or service is the ________ for the good or service.

In January, buyers of gold expect that the price of gold will rise in February.What happens in the gold market in January, holding all else constant?

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets.To the Landry family

Chips and salsa are complements.If the price of salsa decreases, the demand for chips will increase.

"The price of compact fluorescent light bulbs fell because of improvements in production technology.As a result, the demand for incandescent light bulbs decreased.This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.

Ranchers can raise either cattle or sheep on their land.Which of the following would cause the supply of sheep to increase?

Suppose that when the price of hamburgers decreases, the Ruiz family increases their purchases of ketchup.To the Ruiz family,

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