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

For each of the following pairs of products state which are complements,which are substitutes,and which are unrelated. a.Digital camera and memory stick b.7Up and Mountain Dew c.Swimsuits and flip-flops d.Tylenol and cat food e.Photocopier and paper

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?

In October 2005,the U.S.Fish and Wildlife Service banned the importation of beluga caviar,the most prized of caviars,from the Caspian Sea.What happened in the market for caviar in the U.S.?

An increase in the demand for lobster due to changes in consumer tastes,accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster,will result in

Which of the following is the correct way to describe equilibrium in a market?

If the price of a product is above equilibrium,what forces it down?

What are the two effects that explain the Law of Demand? Briefly explain each effect.

Explain the difference between a normal good and an inferior good.

All else equal,a shortage of display screens used in the manufacture of tablet computers would cause the equilibrium price of the tablet computers to ________ and the equilibrium quantity of the tablet computers to ________.

Discuss the correct and incorrect economic analysis in the following statements. "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."

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

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

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

In October,market analysts predict that the price of platinum will fall in November.What happens in the platinum market in October,holding everything else constant?

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 S₁ (point A).If the price of oranges,a substitute for apples,decreases and the wages of apple workers increase,how will the equilibrium point change?

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

Figure 3-5 -Refer to Figure 3-5.At a price of $5,the quantity sold

In response to a surplus the market price of a good will fall;as the price falls,the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?