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

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good)to increase?

If the price of music downloads was to decrease,then

Suppose that when the price of oranges decreases,Sarita decreases her purchases of peaches.To Sarita

A(n)________ is represented by a leftward shift of the demand curve while a(n)________ is represented by a movement along a given demand curve.

Figure 3-2 -Refer to Figure 3-2.A decrease in the expected future price of the product would be represented by a movement from

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

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

At a product's equilibrium price

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

According to a recent study,"Stricter college alcohol policies,such as raising the price of alcohol,or banning alcohol on campus,decrease the number of students who use marijuana." On the basis of this information,how would you describe alcohol and marijuana?

A decrease in the price of GPS systems will result in

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

If the price of peaches,a substitute for plums,increases the demand for plums will decrease.

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 B).If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good),the equilibrium could move to which point?

Which of the following statements is true?

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

What is the ceteris paribus condition?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt.Which panel describes what happens in the market for frozen yogurt when the price of ice cream,a substitute product,increases?

What is a surplus? What is a shortage?

Figure 3-2 -Refer to Figure 3-2.A decrease in the price of substitutes in production would be represented by a movement from