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

If the demand for a product decreases and the supply of the product does not change,equilibrium price and equilibrium quantity will both increase.

Figure 3-2 -Refer to Figure 3-2.A technological advancement would be represented by a movement from

An increase in quantity supplied is represented by a rightward shift of the supply curve.

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

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

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

The market for tablet computers has become very competitive.The increase in competition in this market is an example of how the market responds to

If the price of propane-fueled gas grills was to decrease,then

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

When Toyota introduced its 2010 Prius,it announced that the average retail price of the 2010 model would be lower than the average retail price was for the equivalent 2009 model.Which of the following would explain the price differential?

A firm has an incentive to decrease supply now and increase supply in the future if it expects that

Table 3-1 -Refer to Table 3-1. The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.At a price of $6,the quantity demanded in the market would be

Buyers scrambled to secure stocks of Australian wool following a forecast of an 11 percent decline in wool production.What happens in the Australian wool market as a result of this announcement?

Table 3-2 -Refer to Table 3-2. The table contains information about the sorghum market. Use the table to answer the following questions. a.What are the equilibrium price and quantity of sorghum? b.Suppose the prevailing price is $6 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 $6 per bushel? e.If the market price is $6 per bushel,what must happen to restore equilibrium in the market? f.At what price will suppliers be able to sell 36,000 bushels of sorghum? g.Suppose the market price is $14 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 $14 per bushel? j.If the market price is $14 per bushel,what must happen to restore equilibrium in the market?

If you are considering buying either an Apple iPad or a Samsung Galaxy Tab,and you choose the Samsung only because the price is lower,then you consider

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 price of an input b.An increase in productivity c.An increase in the price of a substitute in production d.A decrease in the expected future price of a product e.A decrease in the current price of the product

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. What panel describes what happens in this market when the price of bratwurst falls?

Holding everything else constant,a decrease in the price of GPS systems will result in

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

Consider the collectors' market for first editions of two popular children's books,Harry Potter and the Order of the Phoenix by J.K.Rowling and Ruby in the Smoke by Philip Pullman. Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel. a.On one large diagram,draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke. b.Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel,even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke. c.Provide a written explanation to accompany your graphical illustration.