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

A shortage occurs when the market price is lower than the equilibrium price.

A decrease in the demand for soft drinks due to changes in consumer tastes, accompanied by an increase in the supply of soft drinks as a result of reductions in input prices, will result in

An inferior good is a good for which the quantity demanded decreases as the price increases, holding everything else constant.

Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?

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

What is the ceteris paribus condition?

Explain the differences between a change in supply and a change in quantity supplied.

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

Use the following supply schedule for cherries to draw a graph of the supply curve. Be sure to label the supply curve and each axis, and show each point on the supply curve.

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?

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?

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant?

What is the law of supply? What does this law imply about the shape of the supply curve?

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is a normal good. a. The population increases and the price of inputs increase. b. The price of a complement increases and technology advances. c. The number of firms in the market increases and income increases. d. Price is expected to increase in the future. e. Consumer preference increases and the price of a substitute in production decreases.

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

All else equal, the decrease in consumer preference predicted by Apple for its iPhone 5 would be represented by a

If the price of peaches, a substitute for plums, decreases the demand for plums will increase.

If a demand curve shifts to the left, then

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