Exam 3: B: Supply, Demand, and the Market Process

Figure 3-20 -Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Market prices generally promote social cooperation because they

If there is an increase in both the supply and demand for a good, which of the following will definitely occur?

Suppose demand increases and supply increases. Which of the following will happen?

Figure 3-18 -Refer to Figure 3-18. Which area represents consumer surplus at a price of P₁?

Under competitive conditions, market prices

Suppose a person defects from Cuba (a country that generally disregards the use of markets) to the United States and asks to see a market in action. Where would you take her? Did you give her a complete showing of this market?

If the market price is above the equilibrium price, there will be a tendency for price to decrease, causing

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What famous economist made this statement?

According to economic theory, which of the following would most likely cause the demand curve for hamburgers to decrease?

Which of the following would be most likely to cause the demand for Miller beer to increase?

When oil prices increased to record levels in the 1970s, salaries dramatically increased for petroleum geologists skilled in finding oil. Those geologists who moved from other areas to the higher paying jobs were

Figure 3-16 -Refer to Figure 3-16. When the price is P₂, producer surplus is

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

When experts first predicted major weather-related coffee crop failures in Central and South America in 1986, the price of coffee already on grocery shelves in the United States increased sharply. When coffee became temporarily more scarce, the usefulness to society of "coffee conservation" increased. The immediate sharp price increase (which soon leveled off) gave consumers an incentive to

Market prices are

Figure 3-18 -Refer to Figure 3-18. Which area represents consumer surplus at a price of P₂?

Suppose prices for new homes have risen and sales of new homes have also risen. We can conclude that

Suppose both the equilibrium price and quantity fall for a particular product. Which of the following best explains this situation?

If cigars and cigarettes are substitute goods, an increase in the price of cigars would result in