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

Figure 3-2 -Refer to Figure 3-2.A technological advancement would be represented by a movement from

As the number of firms in a market decreases,the supply curve will shift to the left and the equilibrium price will fall.

An decrease in supply is caused by a decrease in the price of the product.

The demand for soft drinks in the United States has been ________ while the global demand has been ________.

If tablet computers are considered substitutes for e-readers,the increase in the price of tablet computers would,all else equal,

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

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good)to decrease?

Figure 3-4 -Refer to Figure 3-4.At a price of $20,how many units will be sold?

Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels?

An increase in the demand for LED light bulbs due to changes in consumer tastes,accompanied by an increase in the supply of LED light bulbs as a result of government subsidies,will result in

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

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis,economists assume that the most important determinant of the demand for a good is

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.At a price of $10,the quantity demanded in the market would be

Suppose that when the price of pickles decreases,Teddy increases his purchase of ketchup.To Teddy,

If the price of prime rib falls,the income effect due to the price change will cause

Figure 3-5 -Refer to Figure 3-5.At a price of $0,

Studies have shown that drinking one glass of red wine per day may help prevent heart disease.Assume this is true,and a fungal disease destroys a large portion of the grape harvest of California vineyards.In the market for red wine,these two developments would

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

George Gnat subscribes to a monthly pest control service for his home.Last week the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips.How is the market for pest control services affected by this?

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