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

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 D2 and S2 (point

If consumers believe the price of hybrid vehicles will decrease in the future,this will cause the demand for hybrid vehicles to decrease now.

Consider the collectors' market for first editions of two popular children's books,Harry Potter and the Order of the Phoenix by J.K.Rowling and Ruby in the Smoke by Philip Pullman.Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel. a.On one large diagram,draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke. b.Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel,even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke. c.Provide a written explanation to accompany your graphical illustration.

Figure 3-4 -Refer to Figure 3-4.At a price of $20,how many units will be sold?

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee falls from $6 to $4,the market quantity demanded would

As the number of firms in a market increases,the supply curve will shift to the left and the equilibrium price will rise.

An decrease in supply is caused by a decrease in the price of the product.

A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

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?

Which of the following would shift the supply curve for smartphones to the right?

The growing popularity of energy conservation has enticed large home improvement stores like Home Depot and Lowes to offer tankless water heaters.How does the fact that home improvement stores now offer these products affect the tankless water heater market?

Which of the following would shift the supply curve for energy drinks to the left?

Table 3-1 -Refer to Table 3-1.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee rises from $4 to $5,the market quantity demanded would

Cole was discussing the market for cocoa beans with his friend John Schmidt.Cole said,"Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years,the price of cocoa beans has been rising and rising and people are buying more and more.I think the demand for cocoa beans must be upward sloping." Is Cole right? Briefly explain why or why not.

All else equal,an increase in the price of complementary products for the Apple Watch,such as Sensoria's wearable technology,would

If smartwatches are considered substitutes for smartphones,the increase in the price of smartwatches would,all else equal,

What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.At a price of $6,the quantity demanded in the market would be

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

If a decrease in income leads to a decrease in the demand for ice cream,then ice cream is