Exam 4: Supply and Demand: An Initial Look

Figure 4-9 -"Moonshine" is illegal home brew made by adding sugar to accelerate corn fermentation.Ten pounds of sugar are necessary to make a gallon of moonshine.In the mid-1970s,the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon.Which graph in Figure 4-9 best illustrates this?

Exhibit 4-1 The following are the equations for the supply and demand curves in the market for weezils: Demand =20-2F Supply: =5+3 where Q_d is the quantity demanded, Q_s is the quantity supplied, and P is the price per weezil in dollars. -Refer to Exhibit 4-1.According to the data given,the equilibrium price of a weezil is

Which of the following suggests that the "laws" of supply and demand are being disobeyed?

The more firms that are attracted to an industry,the greater will be the quantity of product supplied at any given price.

Demand and quantity demanded are the same thing.

Figure 4-15 -Recycling of newspapers has been undermined by its success.The supply of old papers,gathered diligently by those concerned with the environment,has increased dramatically,as has the number of firms that convert the material into recycled newsprint.The quantity demanded has remained relatively stable despite falling prices because newspapers consider recycled newsprint an inferior substitute for regular newsprint.Consequently,the price of recycled newsprint has fallen below the cost of production; recycling firms are going out of business; mountains of old newspapers are left behind.Which graph in Figure 4-15 best illustrates this situation?

At an equilibrium price,quantity demanded

Very few societies have used price controls.

From 2007 to 2008,the Federal Reserve System reduced interest rates,the price that borrowers pay.As a result,economists expected that the supply of money would

The slope of a demand curve is almost always

A demand schedule's position is determined partly by the supply of a good.

Even though prices may change frequently,they can be expected to gravitate toward equilibrium.

The Red Jacket Mountain View Inn in New Hampshire charges $159 per room in the winter ski season and $114 during the summer months.The number of rooms and operating costs are constant year round.These prices indicate

Any factor that shifts the supply curve inward and to the left and does not affect the demand curve will raise the equilibrium price and reduce the equilibrium quantity.

A common misperception about consumer demand is that

An important assumption that is made when constructing a supply schedule is

The law of increasing relative costs,depicted by the concavity of the production opportunities frontier,is most closely related to the

A shift in the supply curve of bicycles resulting from higher steel prices will lead to

Define equilibrium as it relates to markets.Describe the process by which a market reaches a new equilibrium.Include an appropriate diagram.

Each point on the demand curve is