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

In 2004, hurricanes destroyed a large portion of Florida's grapefruit crop. How did this affect the market price and market quantity of grapefruit?

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

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

Digital video recorders (DVRs) were introduced to the market in 1999, and new technology has allowed for the cost of manufacturing the recorders to decline significantly since the initial introduction. How did this change in technology affect the market for DVRs?

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

If in the market for apples the supply has decreased, then

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase?

Figure 3-6 -Which of the following is evidence of a surplus of bananas?

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 D1 and S2 (point

Holding everything else constant, a decrease in the price of bicycles will result in

What are the five most important variables that shift the market supply curve?

Figure 3-4 -Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by

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

Draw a demand curve and label it D1. On the graph, illustrate an increase in demand and a decrease in demand, and label the curves D2 and D3, respectively. Starting on demand curve D1, explain the shift that would result from each of the following events: a. an increase in income and the good is a normal good b. an increase in income and the good is an inferior good c. a decrease in the price of a substitute good d. a decrease in the price of a complementary good e. an increase in the taste for the good f. a decrease in population g. an increase in the expected future price of the good

The demand for soft drinks in the United States has been ________ while the global demand has been ________.

Explain the differences between a change in supply and a change in quantity supplied.

Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?

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

A decrease in quantity supplied is represented by a leftward shift of the supply curve.

Figure 3-2 -Refer to Figure 3-2. A decrease in the number of firms in the market would be represented by a movement from