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

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Compare the conditions in the market when the price is $50 and when the price is $35.Which of the following describes how the market differs at these prices?

In 1984, the National Minimum Drinking Age Act was passed, raising the legal age to consume alcoholic beverages in the United States to 21.In much of Europe, the legal age to consume alcohol is 18.If the legal drinking age in the United States was changed back to 18, how would this affect the market for alcoholic beverages? What would happen to the equilibrium price and quantity of alcoholic beverages?

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

How does the decreasing use of traditional cameras affect the market for traditional camera film?

A change in supply is represented by a shift of the supply curve.

What is the ceteris paribus condition?

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

Assume that potatoes are an inferior good.Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?

What are the two effects that explain the law of demand? Briefly explain each effect.

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in

Which of the following would cause a decrease in the supply of milk?

If a demand curve shifts to the left, then

The income effect of a price change refers to the impact of a change in

Which of the following will shift the demand curve for a good?

Figure 3-4 -Refer to Figure 3-4.At a price of $15, how many units will be sold?

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?

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.

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink.Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?

Figure 3-5 -Refer to Figure 3-5.In a free market such as that depicted above, a surplus is eliminated by

The law of demand implies, holding everything else constant, that as the price of bagels increases.