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

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

Table 3-3 -Refer to Table 3-3.The table contains information about the corn market.Use the table to answer the following questions. a.What are the equilibrium price and quantity of corn? b.Suppose the prevailing price is $9 per bushel.Is there a shortage or a surplus in the market? c.What is the quantity of the shortage or surplus? d.How many bushels will be sold if the market price is $9 per bushel? e.If the market price is $9 per bushel, what must happen to restore equilibrium in the market? f.At what price will suppliers be able to sell 24,000 bushels of corn? g.Suppose the market price is $21 per bushel.Is there a shortage or a surplus in the market? h.What is the quantity of the shortage or surplus? i.How many bushels will be sold if the market price is $21 per bushel? j.If the market price is $21 per bushel, what must happen to restore equilibrium in the market?

Suppose that in October, market analysts predict that the price of platinum will fall in November.What happens in the platinum market in October, holding everything else constant?

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?

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.

For each of the following pairs of products state which are complements, which are substitutes, and which are unrelated. a.Blu-ray discs and video-on-demand b.Fiat 500 and Mini Cooper S c.Toothpaste and toothbrush d.Popcorn and snowboards e.Razors and razor blades

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

At a product's equilibrium price

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia)and the rest of the market.At a price of $5, the quantity demanded in the market would be

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

A normal good is a good for which the demand increases as income decreases, holding everything else constant.

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

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

The following appeared in a Florida newspaper a week after a hurricane hit the state."Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding.Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path.Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

Assume that the price for swimming pool maintenance services has risen and sales of these services have fallen.One can conclude that

Because new plastic and recycled plastic are substitutes, as the price of newly produced plastic decreases,

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

Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas.To Lonnie,

An decrease in quantity supplied is represented by a leftward shift of the supply curve.