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

Figure 3-6 -Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. What is a reason for this difference in price?

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 price of an input b. An increase in productivity c. An increase in the price of a substitute in production d. A decrease in the expected future price of a product e. A decrease in the current price of the product

Which of the following has occurred as the baby-boom generation ages?

If the United States placed an embargo on Swedish products, what would happen in the U.S. market for Swedish furniture?

An increase in quantity supplied is represented by a rightward shift of the supply curve.

Which of the following would cause the equilibrium price of apple juice to decrease and the equilibrium quantity of apple juice to increase?

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. Which panel describes what happens in this market when the price of bratwurst falls?

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

In recent years the cost of producing organic produce in the U.S. has decreased largely due technological advancement. At the same time, more and more Americans prefer organic produce over conventional produce. Which of the following best explains the effect of these events in the organic produce market?

Figure 3-1 -Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from

Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?

Figure 3-8 -Select the phrase that correctly completes the following statement. "A positive change in technology caused an increase in the supply of flat-screen televisions. As a result ________."

If the price of gasoline decreases, what will be the impact in the market for public transportation?

In response to a shortage, the market price of a good will rise; as the price rises, the demand will decrease and supply will increase until equilibrium is reached.

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

Select the phrase that correctly completes the following statement. "A decrease in the expected future price caused an increase in the supply of smartphones. As a result,

In 1984, the National Minimum Drinking Age Act was passed, raising the legal age to consume alcoholic beverages in the United States to 21. In much of Europe, the legal age to consume alcohol is 18. If the legal drinking age in the United States was changed back to 18, how would this affect the market for alcoholic beverages? What would happen to the equilibrium price and quantity of alcoholic beverages?

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

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