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

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 demand by all the consumers of a given good or service is the ________ for the good or service.

If the demand for a product decreases and the supply of the same product decreases,the equilibrium price will decrease.

If a demand curve shifts to the right,then

Which of the following is the correct way to describe equilibrium in a market?

A positive technological change will cause the supply of a good to increase.

Suppose that when the price of hamburgers decreases,the Ruiz family increases their purchases of ketchup.To the Ruiz family,

Figure 3-2 -Refer to Figure 3-2.An increase in the price of substitutes in production would be represented by a movement from

As the number of firms in a market increases,the supply curve will shift to the right and the equilibrium quantity will rise.

Figure 3-7 -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?

If the demand for a product increases and the supply of the product does not change,equilibrium price and equilibrium quantity will both increase.

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

'Because apples and oranges are substitutes,an increase in the price of oranges will cause the demand for apples to increase.This initial shift in demand for apples results in a higher price for apples;this higher price will cause the demand curve for apples to shift to the right.' Which of the following correctly comments on this statement?

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

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

A change in supply is represented by a shift of the supply curve.

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for canvas tote bags.Assume that the market price is $35.Which of the following statements is true?

One would speak of a change in the quantity of a good supplied,rather than a change in supply,if

If a decrease in income leads to an increase in the demand for sardines,then sardines are

Draw a demand curve and label it D₁.On the graph,illustrate an increase in demand and a decrease in demand,and label the curves D₂ and D₃,respectively.Starting on demand curve D₁,explain the shift that would result from each of the following events: a.an increase in income and the good is a normal good b.an increase in income and the good is an inferior good c.a decrease in the price of a substitute good d.a decrease in the price of a complementary good e.an increase in the taste for the good f.a decrease in population g.an increase in the expected future price of the good