Exam 3: Basic Elements of Supply and Demand Part

Use the following to answer questions : Figure 3-3 -Assume that automotive workers strike and the technological improvements occur at the same time.If initial market conditions were reflected by the structure of Figure 3-3, which of the following must occur?

Use the following to answer questions : Table 3-1 -According to Table 3-1, we can be fairly certain that:

In a standard supply-and-demand diagram, what happens when demand decreases?

Use the following to answer questions : Figure 3-2 -Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-2, a technological advance that makes the production of Q more efficient will cause:

Since the amount bought must equal amount sold, at no price can there be a lack of equality between the quantities demanded and supplied of a good.

The demand curve for a normal good will shift to the right if:

Use the following to answer questions : Table 3-1 -According to Table 3-1, the equilibrium level of output is:

Use the following to answer questions : Figure 3-5 -According to the standard supply and demand apparatus, line A in Figure 3-5 should represent:

Assume that the demand for boats as shown in the figure below is P = $500 - 10Q, while the supply is P = $100 + 10Q.Market equilibrium would then be:

The high and rising price of lobsters is not necessarily indicative of monopoly in the lobster-fishing market.

Use the following to answer questions : Figure 3-6 -Given the supply and demand curves drawn in Figure 3-6, an increase in the cost of an input can be expected to push the market clearing price up and the market clearing quantity down.

If E were the old equilibrium in the market for wheat in the figure below, and E' the new one, which of the following could have caused the change?

The law of downward-sloping demand states that there is an inverse relation between price and quantity demanded.

Good growing conditions for wheat would probably

Four of the five events described below might reasonably be expected to shift the demand curve for beef to a new position.One would not shift that demand curve.The single exception is:

Any change in the price of an input can be expected to move equilibrium price up or down in the same direction along the market demand curve.(Everything else held fixed.)

The market mechanism uses price as a rationing device.

When we say that a price in a competitive market is "too high to clear the market" we usually mean that (given upward-sloping supply curves):

An increase in the supply of commodity X for any given price of X could be caused by

Use the following to answer questions : Figure 3-5 -Which of the following could represent the demand schedule in Figure 3-5?