Exam 3: Demand and Supply

When the price of gas goes up and the demand for tires goes down, this means tires and gas are:

-(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose consumer incomes increase. Which panel best describes how this will affect the market for tuxedoes, a normal good?

A shortage occurs at any price above the equilibrium price.

Given the events listed below that take place in the corn market, decide if demand or quantity demanded changes and determine the direction of change. JA. The economy prospers and incomes rise dramatically. JB. The price of corn falls. JC. The price of pork increases, and corn is a significant input in the pork market. JD. The price of oats, a substitute for corn, falls. JE. The price of corn increases. JF.A new fertilizer comes on the market that leads to tremendous increases in corn productivity.

Assume a market initially exhibits a shortage. Assuming that both prices and quantities are flexible, which of the following will be true after the market adjusts to equilibrium?

If the current price is less than the market clearing or equilibrium price, we would expect:

-(Exhibit: Demand and Supply) If the equilibrium price fell to $2 because of a shift to the left of the demand curve, the quantity supplied would be:

An increase in the price of football tickets will cause the ________ for (of) basketball tickets (a substitute) to ________ .

-(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating asparagus slows down the aging process. Which panel best describes how this will affect the market for asparagus?

Two goods are substitutes if:

The relationship between the price of a good and the quantity people are willing and able to purchase is:

An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

A decrease in price will lead to an increase in the quantity demanded.

A shortage will exert pressures for the price to decrease.

-(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose the technology for producing snowboards improves. Which panel best describes how this will affect the market for winter parkas, a complement of snowboards?

A decrease in the price of a good will result in a decrease in supply.

An increase in price will result in an increase in supply.

For most goods, purchases tend to rise with increases in buyers' incomes and to fall with decreases in buyers' incomes. Such goods are known as:

The Demand for Chocolate-Covered Peanuts Quantity Demanded (bags per month) -(Exhibit: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is 80 cents, the total market demand is ________ bags per month.

-(Exhibit: Demand and Supply Curves) The lowest price per unit that sellers would be willing to accept for 50 units is: