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

In July,market analysts predict that the price of gold will rise in August.What happens in the gold market in July,holding everything else constant?

If an increase in income leads to in an increase in the demand for peanut butter,then peanut butter is

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for tuna.Which panel best describes what happens in this market when there is a decrease in the productivity of commercial fishermen?

Which of the following would cause an increase in the supply of cheese?

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

"The price of compact fluorescent light bulbs fell because of improvements in production technology.As a result,the demand for incandescent light bulbs decreased.This caused the price of incandescent light bulbs to fall;as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.

Figure 3-5 -Refer to Figure 3-5.At a price of $15

An increase in the quantity of a product supplied is caused by an increase in the price of the product.

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen.One can conclude that

A ________ demand curve for shampoo would be caused by a change in the price of shampoo.

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

A firm must devote people,time,and money to designing a new product.Because any firm has only limited resources,it

If the Apple Watch and the Samsung Gear S2 are considered substitutes,then,other things equal,an increase in the price of the Apple Watch will

Figure 3-1 -Refer to Figure 3-1.An increase in taste or preference would be represented by a movement from

The cost of producing cigarettes in the United States has increased and at the same time,more and more Americans are choosing to not smoke cigarettes.Which of the following best explains the effect of these events in the cigarette market?

According to the Australian Wool Innovation,severe drought conditions in Australia contributed to the lowest level of wool production in 50 years.This record low production has driven up prices sharply in Australian wool markets.Meanwhile,the price of raw cotton increased significantly for the first time in many years. a.Illustrate this observation with one demand and supply graph for the market for Australian wool and another demand and supply graph for raw cotton. b.Make sure that your graphs clearly show (1)the initial equilibrium before the decrease in the supply of Australian wool and (2)the final equilibrium. c.Use arrows to indicate any shifts in the demand and supply curves for each market. d.Label your graphs fully and write an explanation of your work.

If pilots and flight attendants agree to wage and benefit reductions in the wake of the financial difficulties in the airline industry,what impact would this have on the supply and demand in the market for airline service,assuming no other changes take place in this market?

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts less than the demand curve.As a result

Figure 3-3 -Refer to Figure 3-3.The figure above shows the supply and demand curves for two markets: the market for an original Picasso painting and the market for designer jeans.Which graph most likely represents which market?

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 S1 (point A).If there is an increase 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?