Exam 4: Demand, Supply, and Market Equilibrium

If the law of supply holds, then the supply curve can never:

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

Define an "inferior good" as it relates to markets.

If the equilibrium price of a good increases and the equilibrium quantity of the good decreases, we can conclude that:

Suppose that the quantity demanded for cars exceeds the quantity supplied of cars. We would expect that:

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.)

Why do the demand curves for inferior goods slope downward, even though the law of demand is driven in part by the income effect?

Figure 4.5 -Figure 4.5 illustrates the supply of guitars. An increase in the price of rosewood, which is used to make guitars, would most likely cause a movement from:

Suppose that the price of fertilizer, an input in the production of corn, falls. We would predict that the equilibrium quantity of corn will _______ and the equilibrium price of corn will _______ .

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

Two goods are complements if an increase in the price of one good leads to an increase in demand for the other.

Recall Application 3, "The Supply and Demand for Cruise Ship Berths," to answer the following questions: -Because the application claims that a recession will decrease the demand for cruise ships, we can infer that cruise ship berths are:

The market demand curve:

What does an increase in population do to the demand for a product?

When a demand curve is drawn, which of the following is not held constant?

Figure 4.3 -Figure 4.3 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $30, we would expect the price of blue jeans to _______, the quantity demanded of blue jeans to _______, and the quantity supplied of blue jeans _______.

People will buy more of a normal good when their income decreases.

An increase in supply of a product results when:

If the incomes decrease and electricity is a normal good, then:

Governments often 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.