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

Indicate whether each of the following situations would shift the supply curve to the left,to the right,or not at all. a.An increase in the number of firms in the market b.An increase in the current price of the product c.A decrease in productivity d.An increase in the expected future price of a product e.A decrease in the price of an input

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.

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

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

Figure 3-2 -Refer to Figure 3-2.An increase in the number of firms in the market would be represented by a movement from

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?

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.

Figure 3-1 -Refer to Figure 3-1.If the product represented is an inferior good,an increase in income would be represented by a movement from

Prices of California Merlot wine (assume that this is a normal good)have risen steadily in recent years.Over this same period,prices for French oak barrels used for wine storage have dropped and consumer incomes have risen.Which of the following best explains the rising prices of California Merlots?

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

During the recession of 2007-2009,despite falling income levels,the fast-food chain Subway experienced increased sales.The increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered

Discuss the correct and incorrect economic analysis in the following statements. "The United Auto Workers Union has successfully negotiated a 9 percent increase in wages for its workers.This increase in the wage rate causes an increase in demand for automobiles,since many consumers now have greater incomes,and also a decrease in the supply of automobiles because the cost of production has increased.These effects cancel each other out resulting in no change in equilibrium price and quantity in the automobile market."

Figure 3-4 -Refer to Figure 3-4.At a price of $10,how many units will be sold?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for almonds.Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Last year,the Pottery Palace supplied 8,000 ceramic pots at $40 each.This year,the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence,The Pottery Palace has experienced

A decrease in the price of GPS systems will result in

In a perfectly competitive market,there are ________ buyers and ________ sellers.

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

Explain the difference between a normal good and an inferior good.

During the recession of 2007-2009