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

Harvey Rabbitt pays for monthly cable TV service.Last week, the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area.How is the market for cable TV services affected by this?

At a product's equilibrium price

Assume that microbrewery beer is a normal good.Prices of microbrewery beer 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?

In June, buyers of titanium expect that the price of titanium will fall in July.What happens in the titanium market in June, holding everything else constant?

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

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for caviar of two individuals (Ari and Sonia)and the rest of the market.At a price of $55, the quantity demanded in the market would be

If the price of grapefruit rises, the substitution effect due to the price change will cause

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

How does the increasing use of MP3 players affect the market for compact discs?

If, in response to an increase in the price of chocolate, the quantity of chocolate demanded decreases, then economists would describe this as

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

Due to wildfires in Northern California, agricultural experts predict a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?

If the amount of carbonated sodas consumed continues to decline as consumers continue to choose to buy healthier products, this will likely

Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each.This year, the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence, The Pottery Palace has experienced

Which of the following is the correct way to describe equilibrium in a market?

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good. a.The population increases and productivity increases. b.Income increases and the price of inputs decrease. c.The number of firms in the market decreases and income increases. d.Consumer preference increases and the price of a complement decreases. e.The price of a substitute in consumption decreases and the price of a substitute in production decreases.

A change in which variable will change the market demand for a product?

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 S₂ (point

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

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