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

Assume that the price for lawn care has fallen and sales of lawn care services have also fallen. One can conclude that

When the price of a good falls, consumers buy a larger quantity because of the ________ effect and the ________ effect.

Holding everything else constant, an increase in the price of raisins will result in

All else equal, as the price of a product falls, the quantity supplied increases.

If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, economists would describe this as

Figure 3-8 -Which of the following statements is true?

Figure 3-6 -At market equilibrium,

If the number of firms producing electric cars increases and consumer preference for electric cars increases, the equilibrium quantity of electric cars will definitely increase.

A decrease in supply is caused by a decrease in the price of the product.

Which of the following statements is true?

Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would

If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now.

In recent years the cost of producing wines in the U.S. has increased largely due to rising rents for vineyards. At the same time, more and more Americans prefer wine over beer. Which of the following best explains the effect of these events in the wine market?

A normal good is a good for which the demanded increases as income decreases, holding everything else constant.

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

Figure 3-6 -Which of the following is evidence of a shortage of walnuts?

Figure 3-1 -If the price of automobiles was to increase, then

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?

What are the five variables that will shift the demand curve?

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 S1 (point A) A