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

Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for sushi if the Surgeon General announces that a majority of the raw fish that is imported to make sushi contains high levels of toxic mercury?

Explain the Law of Demand.

Shrimp is an increasingly popular part of the American diet.Louisiana shrimpers who represent the bulk of the U.S.industry were almost all put out of business by Hurricane Katrina.How did this affect the equilibrium price and quantity of shrimp?

"The price of digital cameras fell because of improvements in production technology.As a result,the demand for non-digital cameras decreased.This caused the price of non-digital cameras to fall;as the price of non-digital cameras fell the demand for non-digital cameras decreased even further." Evaluate this statement.

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good)to increase?

Technological advancements have led to lower prices and an increase in the sale of color laser printers.How does this affect the market for traditional inkjet printers?

If the demand for a product increases and the supply of the same product decreases,the equilibrium price will increase.

If the price of propane-fueled gas grills was to decrease,then

Assume there is a surplus in the market for hybrid automobiles.Which of the following statements correctly describes this situation?

If the price of pork rinds falls,the substitution effect due to the price change will cause

By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis,economists assume that the most important determinant of the demand for a good is

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 S1 (point C).Which of the following changes would cause the equilibrium to change to point B?

Holding everything else constant,an increase in the price of raisins will result in

Because new plastic and recycled plastic are substitutes,as the price of newly produced plastic increases,

If the United States lifts the embargo on Cuban products,what will happen in the U.S.market for Cuban cigars?

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

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 S1 (point A).If there is a surplus of motorcycles how will the equilibrium point change?

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated. a.Swim fins and scuba tanks b.Coca Cola and Volkswagens c.Printers and ink cartridges d.Ice and ice chests e.Heineken and Corona

All else equal,as the price of a product falls,the quantity supplied decreases.

An increase in quantity supplied is represented by a rightward shift of the supply curve.