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

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.Which of the following events would cause the price differences in these letters to get smaller?

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

A decrease in the equilibrium price for a product will result

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated. a.Digital camera and memory card b.7Up and Mountain Dew c.Swimsuits and flip-flops d.Tylenol and cat food e.Photocopier and paper

Figure 3-2 -Refer to Figure 3-2.A decrease in the price of the product would be represented by a movement from

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve.As a result

Suppose the cost of growing organic corn has risen at the same time as consumer preference for organic corn has fallen.In the market for organic corn, this would be represented by the equilibrium price ________ and the equilibrium quantity ________.

If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease.

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

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.

Vineyards can grow either red wine grapes or white wine grapes on their land.Which of the following would cause the supply of red wine grapes to decrease?

All else equal, as the price of a product falls, the quantity supplied increases.

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₂ (point B). If there is a decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

Which of the following would shift the supply curve for MP3 players to the right?

Figure 3-4 -Refer to Figure 3-4.If the price is $15,

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles?

An increase in the number of firms in a market will cause the quantity of a good supplied to increase.

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, then economists would describe this as