Exam 3: Demand and Supply

All other things unchanged, a tax on a product that leads to an increase in the cost of production would:

Supply is best defined as the:

Which of the following always results in an increase in equilibrium price and quantity?

-(Exhibit: Demand and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose half the people in San Diego move to Colorado Springs. Which panel best describes how this will affect the market for houses in Colorado Springs?

An increase in both supply and demand must increase both equilibrium price and quantity.

There is equilibrium in the market when:

The law of demand is illustrated by a demand curve that is:

-(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a new machine is developed that allows restaurants and fast-food outlets to produce French fries at a lower cost. Which panel best describes how this will affect the market for French fries?

It's certain that the equilibrium price will fall when:

-(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose a wet and sunny year increases the nation's corn crop by 20 percent. Which panel best describes how this will affect the market for corn?

-(Exhibit: Demand Shifters and Supply Shifters) The exhibit shows how supply and demand might shift in response to specific events. Suppose a wet and sunny year increases the nation's sweet corn crop by 20 percent. Which panel best describes how this will affect the market for frozen peas, a substitute for sweet corn?

Demand and Supply Schedules for a Good -(Exhibit: Demand and Supply Schedules for a Good.) If there were an increase in demand by 50 units at each price, the equilibrium price and quantity would be ________ and ________ units, respectively.

If both the demand for a product and the supply of it decrease, then the equilibrium quantity will ________ and the equilibrium price will ________.

Describe what would happen in a market if the current price were above the equilibrium price (assume no government interference). Using the same assumptions, describe what would happen if the current price were below the equilibrium price. Use a graph to explain your answer.

A decrease in the price of milk (and ingredient of ice cream) will result in a(n):

-(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose the population increases. Which panel best describes how this will affect the market for apples?

The Demand for Chocolate-Covered Peanuts Quantity Demanded (bags per month) -(Exhibit: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts increases from 40 cents to 50 cents, Dan will reduce his quantity demanded from 160 bags to 140 bags due to:

-(Exhibit: Demand and Supply of Gasoline) When the supply curve shifted from the initial equilibrium to the new intersection of supply and demand at a price of ________ and quantity of 400, this could have resulted from ________ .

The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?

Price changes for complements and substitutes have the same effect on demand.