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

Which of the following would shift the supply curve for energy drinks to the left?

For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated. a. Blu-ray discs and video-on-demand b. Fiat 500 and Mini Cooper S c. Toothpaste and toothbrush d. Popcorn and snowboards e. Razors and razor blades

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S1 (point

If the price of train tickets decreases, what will be the impact in the market for bus travel?

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

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

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

Discuss the correct and incorrect economic analysis in the following statement. "The United Auto Workers Union has successfully negotiated a 9 percent increase in wages for its workers. This increase in the wage rate causes an increase in demand for automobiles, since many consumers now have greater incomes, and also a decrease in the supply of automobiles because the cost of production has increased. These effects cancel each other out resulting in no change in equilibrium price and quantity in the automobile market."

Figure 3-8 -The following appeared in a Florida newspaper a week after a hurricane hit the state. "Floridians are relieved that the storm produced no fatalities, but homeowners face weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane's path. Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent." Which of the following offers the best explanation for the price increases referred to in the article?

What are the two effects that explain the Law of Demand? Briefly explain each effect.

What is the difference between a "change in demand" and a "change in quantity demanded"?

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

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

If the price of orchids falls, the substitution effect due to the price change will cause

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

Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S2 (point

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

Use the following demand schedule for apples to draw a graph of the demand curve. Be sure to label the demand curve and each axis, and show each point on the demand curve.

How does the decreasing use of traditional cameras affect the market for traditional camera film?