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

Which of the following would cause a decrease in the supply of peanut butter?

What are the five most important variables that shift the market supply curve?

What is the difference between a market equilibrium and a competitive market equilibrium?

Article Summary A growing number of U.S. citizens are going to other countries for elective surgery procedures. Improved quality and significant cost savings abroad have attracted an increasing number of what are being referred to as American medical tourists, especially those who either do not have insurance or whose insurance does not cover the desired procedure. As few as five years ago, Americans tended to travel to countries such as Thailand or Mexico for the procedures, but many are now choosing to go to Europe, where governments and hospitals are now publicizing these services. Many of the procedures being done overseas are joint replacement, and partly in response to the number of patients going abroad for these procedures, programs are being developed to reduce the cost of these surgeries in the United States. Source: Elizabeth Rosenthal, "The Growing Popularity of Having Surgery Overseas," New York Times, August 6, 2013. -Refer to the Article Summary.If European governments and hospitals continue to publicize their existing services to American medical tourists and more Americans consider joint-replacement surgery to improve their quality of life,what will happen in the market for joint-replacement surgery as a result of these two factors?

Figure 3-4 -Refer to Figure 3-4.At a price of $25,how many units will be supplied?

A change in quantity supplied is represented by a movement along the supply curve.

Figure 3-5 -Refer to Figure 3-5.In a free market such as that depicted above,a shortage is eliminated by

Digital video recorders (DVRs)were introduced to the market in 1999,and new technology has allowed for the cost of manufacturing the recorders to decline significantly since the initial introduction.How did this change in technology affect the market for DVRs?

All else equal,as the price of a product falls,the quantity supplied decreases.

It is possible for a market for a good to experience a surplus and a shortage at the same time.

If a firm expects that the price of its product will be lower in the future than it is today

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₂ and S₂ (point

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for coffee grinders.Assume that the market price is $21.Which of the following statement is true?