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

Figure 3-4 -Refer to Figure 3-4.If the price is $25,

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product.

In January,buyers of gold expect that the price of gold will fall in February.What happens in the gold market in January,holding everything else constant?

A(n)________ is represented by a rightward 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.An increase in the price of the product would be represented by a movement from

Figure 3-1 -Refer to Figure 3-1.A decrease in the expected future price of the product would be represented by a movement from

An increase in the price of MP3 players will result in

Prices of smartphones (assume that this is a normal good)have fallen in recent years.Over this same period,the price of the components used to produce smartphones has also fallen and consumer incomes have risen.Which of the following best explains the falling prices of smartphones?

Figure 3-5 -Refer to Figure 3-5.At a price of $15,the quantity sold

If you are considering buying either an Apple Watch or a Samsung Gear S2,and you choose the Samsung only because the price is lower,then you consider

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for coffee grinders.Compare the conditions in the market when the price is $15 and when the price is $21.Which of the following describes how the market differs at these prices?

How does the increasing use of digital cameras affect the market for traditional camera film?

Figure 3-1 -Refer to Figure 3-1.An increase in the price of a substitute would be represented by a movement from

If a decrease in income leads to an increase in the demand for macaroni,then macaroni is

Figure 3-6 -Refer to Figure 3-6.The figure above represents the market for coffee grinders.Assume that the price of coffee grinders is $50.At this price,

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

If the price of beef jerky rises,the substitution effect due to the price change will cause

Figure 3-5 -Refer to Figure 3-5.At a price of $0,

In much of Europe,the legal age to obtain a driver's license is 18.If the legal driving age in the United States was changed to 18,how would this affect the market for new automobiles? The market for automobile insurance?

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