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

Figure 3.13 Alt text for Figure 3.13a: In figure 3.13a, a graph of intersecting demand and supply curves represents a rising supply of bicycle helmets. Long description for Figure 3.13a: The x-axis is labelled, Quantity and the y-axis is labelled, as Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve S1 is a straight line which slopes up from the bottom left to the top right.The point of intersection is at the midpoints of both lines.Curve S2 is a straight line, parallel to curve S1, but plotted to the right.A right pointing arrow indicates the change from S1 to S2. Alt text for Figure 3.13b: In figure 3.13b, a graph of intersecting demand and supply curves represents a falling supply of bicycle helmets. Long description for Figure 3.13b: The x-axis is labelled, Quantity and the y-axis is labelled, as Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve S1 is a straight line which slopes up from the bottom left to the top right.The point of intersection is at the midpoints of both lines.Curve S2 is a straight line, parallel to curve S1, but plotted to the left.A left pointing arrow indicates the change from S1 to S2. Alt text for Figure 3.13c: In figure 3.13c, a graph of intersecting demand and supply curves represents a rising demand for bicycle helmets. Long description for Figure 3.13c: The x-axis is labelled, Quantity and the y-axis is labelled, as Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve S1 is a straight line which slopes up from the bottom left to the top right.The point of intersection is at the midpoints of both lines.Curve D2 is a straight line, parallel to curve D1, but plotted to the right.A right pointing arrow indicates the change from D1 to D2. Alt text for Figure 3.13d: In figure 3.13d, a graph of intersecting demand and supply curves represents a falling demand for bicycle helmets. Long description for Figure 3.13d: The x-axis is labelled, Quantity and the y-axis is labelled, as Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve S1 is a straight line which slopes up from the bottom left to the top right.The point of intersection is at the midpoints of both lines.Curve D2 is a straight line, parallel to curve D1, but plotted to the left.A left pointing arrow indicates the change from D1 to D2. -Refer to Figure 3.13.Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Which of the following products would be most likely to see a rise in demand due a drop in incomes?

Figure 3.3 Alt text for Figure 3.3: In figure 3.3, a graph of the effect of an increase in the price of inputs on the supply curve. Long description for Figure 3.3: The x-axis is labelled, Quantity, and the y-axis is labelled, Price.Curve Supply, S1, is a straight line which slopes up from the bottom left corner to the top right corner.2 points, A and B, are marked in the middle of curve S1.Curve S2 follows the same slope as curve S1, but is plotted to the right.A right pointing arrow indicates the change from curve S1 to curve S2. -Refer to Figure 3.3.A decrease in the price of the product would be represented by a movement from

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is

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

A change in all of the following variables will change the market demand for a product except

Elvira decreased her consumption of bananas when the price of peanut butter increased.For Elvira, peanut butter and bananas are

If the price of grapefruit rises, the substitution effect due to the price change will cause

If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until

Many universities offer student bus passes (often included with student fees)in an effort to reduce demand for on campus parking. This means universities must believe that

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

Hurricane Juan hit Halifax in 2003.The storm did over $300 million in damage.In the effort to repair the damage done by the storm, the prices of basic building materials and contractors increased dramatically.Many residents complained of profiteering and price gouging by contractors and home improvement stores.Which of the following offers the best explanation of the price increases people were seeing?

Prices of commercial airline tickets have fallen in recent months.Over this same period, the price of jet fuel has risen and consumer incomes have fallen.Which of the following best explains the falling prices of airline tickets? Assume that airline tickets are a normal good.

The Internet has created a new category in the book selling market, namely, the "barely used" book.How does the availability of barely used books affect the market for new books?

Figure 3.11 Alt text for Figure 3.11: In figure 3.11, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets. Long description for Figure 3.11: The x-axis is labelled, Quantity, and is marked from 0 to 8 in increments of 2.The y-axis is labelled, Price, and is marked from 0 to 20 dollars in increments of 5.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is marked at (4,10).2 points plotted on the demand curve to the left of the equilibrium are (0,20)and (2,15).2 points plotted on the demand curve to the right of the equilibrium are (6,5)and (8,0).2 points plotted on the supply curve to the right of the equilibrium are (6,15)and (8,20).2 points plotted on the supply curve to the left of the equilibrium are (2,5)and (0,0). -Refer to Figure 3.11.At a price of $5,

Studies have shown links between calcium consumption and a reduction in osteoporosis.How does this affect the market for calcium?

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until

Figure 3.7 Alt text for Figure 3.7: In figure 3.7, a graph plotting intersecting supply and demand curves illustrates surplus and shortage in a market, along with an equilibrium. Long description for Figure 3.7: The x-axis is labelled, Quantity, and is marked from 0 to 8 in increments of 2.The y-axis is labelled, Price, and is marked from 0 to 20 dollars in increments of 5.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is marked at (4,10).2 points plotted on the demand curve to the left of the equilibrium are (0,20)and (2,15).2 points plotted on the demand curve to the right of the equilibrium are (6,5)and (8,0).2 points plotted on the supply curve to the right of the equilibrium are (6,15)and (8,20).2 points plotted on the supply curve to the left of the equilibrium are (2,5)and (0,0). -Refer to Figure 3.7.In a free market such as that depicted above, a surplus is eliminated by

Several studies have shown promising links between green tea consumption and cancer prevention.How will this affect the market for green tea?