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

Figure 3-8 -If more insurance companies decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?

Figure 3-1 -Suppose that when the price of hamburgers decreases, the Ruiz family increases their purchases of ketchup. To the Ruiz family,

Table 3-6 -Refer to Table 3-6. The table contains information about the sorghum market. Use the table to answer the following questions. a. What are the equilibrium price and quantity of sorghum? b. Suppose the prevailing price is $6 per bushel. Is there a shortage or a surplus in the market? c. What is the quantity of the shortage or surplus? d. How many bushels will be sold if the market price is $6 per bushel? e. If the market price is $6 per bushel, what must happen to restore equilibrium in the market? f. At what price will suppliers be able to sell 36,000 bushels of sorghum? g. Suppose the market price is $14 per bushel. Is there a shortage or a surplus in the market? h. What is the quantity of the shortage or surplus? i. How many bushels will be sold if the market price is $14 per bushel? j. If the market price is $14 per bushel, what must happen to restore equilibrium in the market?

Buyers scrambled to secure stocks of Australian wool following a forecast of an 11 percent decline in wool production. What happens in the Australian wool market as a result of this announcement?

Figure 3-1 -Refer to Figure 3-1. An increase in the price of the product would be represented by a movement from

Figure 3-5 -Refer to Figure 3-5. At a price of $15, the quantity sold

Figure 3-8 -A decrease in the equilibrium quantity for a product will result

Figure 3-8 -"Because chips and salsa are complements, an increase in the price of chips will cause the demand for salsa to decrease. This initial shift in demand for chips results in a higher price for chips; this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement?

In April, market analysts predict that the price of titanium will fall in May. What happens in the titanium market in April, holding everything else constant?

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product.

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza,

Which of the following would shift the supply curve for MP3 players to the left?

A decrease in the price of GPS systems will result in

Figure 3-2 -Refer to Figure 3-2. A decrease in productivity would be represented by a movement from

Figure 3-1 -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?

Explain the difference between a normal good and an inferior good.

Figure 3-5 -In a perfectly competitive market, there are ________ buyers and ________ sellers.

"The price of compact fluorescent light bulbs fell because of improvements in production technology. As a result, the demand for incandescent light bulbs decreased. This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell, the demand for incandescent light bulbs decreased even further." Evaluate this statement.

A movement along the demand curve for toothpaste would be caused by