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

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

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

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is

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

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

Which of the following would cause a decrease in the supply of milk?

Cole was discussing the market for cocoa beans with his friend John Schmidt. Cole said, "Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years, the price of cocoa beans has been rising and rising and people are buying more and more. I think the demand for cocoa beans must be upward sloping." Is Cole right? Briefly explain why or why not.

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

Figure 3-8 -Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right, but the supply curve shifts less than the demand curve. As a result

Table 3-1 -Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be

In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit,

An article in the Wall Street Journal in early 2001 noted two developments in the market for laser eye surgery. The first development concerned side effects from the surgery, including blurred vision. The second development was that the companies renting eye-surgery machinery to doctors had reduced their charges. In the market for laser eye surgeries, these two developments

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets. To the Landry family,

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

When the price of a good rises, consumers buy a smaller quantity because of the ________ effect and the ________ effect.

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in

Figure 3-1 -Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all. a. An increase in the number of firms in the market b. An increase in the current price of the product c. A decrease in productivity d. An increase in the expected future price of a product e. A decrease in the price of an input

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see