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

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

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?

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 3-4 -Refer to Figure 3-4.If the current market price is $10,the market will achieve equilibrium by

The substitution effect explains why there is a direct relationship between the price of a product and the quantity of the product demanded.

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₂ (point B)) If there is an decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

Blu-ray players were introduced to the market in 2006,and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction.How did this change in technology affect the market for Blu-ray players?

What is the law of supply? What does this law imply about the shape of the supply curve?

Olive oil producers want to sell more olive oil at a higher price.Which of the following events would have this effect?

The law of demand implies,holding everything else constant,that

The popularity of digital cameras has enticed large discount stores like Wal-Mart and Costco to offer digital photo printing services.How does this affect the digital photo printing market?

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

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest.What happens in the California wine market as a result of this announcement?

Technological advancements have led to lower prices and an increase in the sale of digital cameras.How does this affect the digital photo printing paper market?

Let D= demand,S = supply,P = equilibrium price,Q= equilibrium quantity.What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?

Which of the following is evidence of a surplus of bananas?

Figure 3-2 -Refer to Figure 3-2.A decrease in productivity would be represented by a movement from

Which of the following will shift the demand curve for a good?

At a product's equilibrium price

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?