Exam 4: Demand, supply, and Market Equilibrium

Governments occasionally get involved in creating a market equilibrium by setting a maximum price that is less than the equilibrium price,resulting in a permanent excess demand for the products.

Suppose that a market for a product is in equilibrium at a price of $5 per unit.At any price below $5 per unit:

Suppose that a natural disaster substantially increases the cost of producing cheese.We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________.

Draw a graph to illustrate the effect of an increase in demand on the price and quantity in a market.

The market equilibrium price and quantity can be affected if:

When a consumer's income increases,that consumer tends to buy more ________.

When Tom's income decreases,he purchases more hamburgers.We can conclude that for Tom,hamburger is a(n)________ good.

If the government imposes a price ceiling that is below the equilibrium price,then the market will experience:

When a government pays a company for producing a product or good with the result that selling the product is more profitable regardless of the price so that the company will produce more of it,it is called a ________.

If the cost of producing a product goes down,this will cause the equilibrium price of the product to go down and the equilibrium quantity of the product to go up.

A major freeze in Florida has reduced the orange yield this winter.What will be the effect of this freeze on the price and quantity in the orange market and also in the peach market? (Assume that oranges and peaches are substitutes. )

Suppose that the current price in a market for Pizza is $9.At that price,the quantity demanded is 519 and the quantity supplied is 400.At the current price,the market is experiencing:

If the cost of producing a good goes down,this will cause the equilibrium price of the good to go down and the equilibrium quantity of the good to go up.

Bananas and apples are substitutes.When the price of bananas rises and a technological advance in apple production occurs at the same time:

The market demand curve is:

Using a graph,illustrate the effect that an increase in production costs will have on the equilibrium price and quantity of a good.

If sellers have an expectation of lower future prices:

Figure 4.4 -Figure 4.4 illustrates the demand for guitars.An increase in price of guitars would bring about a movement from:

A decrease in the cost of labor or some other input will make the production of a product less costly and more profitable at a given price,so producers will supply more of it.This is an example of ________.

From the Application,which of the following would we observe in the market for pecans as a result of an increase in the demand for pecans?