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

A change in quantity supplied is represented by a movement along the supply curve.

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for blu-ray discs.Which panel best describes what happens in this market if there is a substantial increase in the price of blu-ray players?

The law of demand implies,holding everything else constant,that as the price of yogurt

Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good)to decrease?

For each of the following pairs of products,state which are complements,which are substitutes,and which are unrelated. a.House plants and potato chips b.Eyeglasses and contact lenses c.Motorcycles and gasoline d.Smartphone and smartphone apps e.Red wine and white wine

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005.As a result of this,many gasoline distributors were not able to maintain normal deliveries.At the pre-hurricane equilibrium price (i.e. ,at the initial equilibrium price),we would expect to see

Competitive market equilibrium is a market equilibrium with many buyers and sellers.

Indicate whether each of the following situations would shift the supply curve to the left,to the right,or not at all. a.An increase in the price of an input b.An increase in productivity c.An increase in the price of a substitute in production d.A decrease in the expected future price of a product e.A decrease in the current price of the product

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

Discuss the correct and incorrect economic analysis in the following statements. "If a disease kills a large number of turkeys,the supply of turkeys will decrease.This will result in a price increase,which will then cause the supply of turkeys to increase."

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for laptop computers.Which panel best describes what happens in this market when the price of computer hard drives falls?

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).If the price of motorcycle side cars (a complement to motorcycles)decreases,and the wages of motorcycle workers increase,how will the equilibrium point change?

Assume that in recent years the cost of producing microbrew beer in the U.S.has decreased largely due to technological improvements.At the same time,more and more Americans prefer microbrew beer over wine.Which of the following best explains the effect of these events in the microbrew beer market?

If the population increases and input prices increase,the equilibrium price of a product will definitely increase.

When the price of a good rises,consumers buy a smaller quantity because of the ________ effect and the ________ effect.

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts more than the demand curve.As a result,

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

Suppose a drought resulted in a major reduction in the California lettuce crop.In the market for lettuce,

Draw a demand curve and label it D1.On the graph,illustrate an increase in demand and a decrease in demand,and label the curves D2 and D3,respectively.Starting on demand curve D1,explain the shift that would result from each of the following events: a.a decrease in income and the good is a normal good b.a decrease in income and the good is an inferior good c.an increase in the price of a substitute good d.an increase in the price of a complementary good e.a decrease in the taste for the good f.an increase in population g.a decrease in the expected future price of the good