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

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

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change.

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

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

Holding everything else constant,an increase in the price of MP3 players will result in

A decrease in the equilibrium price for a product will result

Figure 3-5 -Refer to Figure 3-5.At a price of $15,

Discuss the correct and incorrect economic analysis in the following statements. "If good weather in Hawaii creates a bumper crop of pineapples,the supply of pineapples will increase.This will result in a price decrease,which will then cause the supply of pineapples to decrease."

In each of the following situations,list what will happen to the equilibrium price and the equilibrium quantity for a particular product,which is a normal good. a.The population increases and the price of inputs increase b.The price of a complement increases and technology advances c.The number of firms in the market increases and income increases d.Price is expected to increase in the future e.Consumer preference increases and the price of a substitute in production decreases

Figure 3-4 -Refer to Figure 3-4.If the current market price is $10,the market will achieve equilibrium by

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

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

In the United States during the recession of 2007-2009,

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 E) Which of the following changes would cause the equilibrium to change to point A?

What is the ceteris paribus condition?

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

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

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