Exam 4: Demand, Supply, and Market Equilibrium

Name at least three variables that can affect the demand for a product and the market equilibrium.

Flour is used to produce bread. If the price of flour increases:

If the government imposes a price floor that is above the equilibrium price, then the market will experience:

A decrease in supply will cause the equilibrium price and quantity of a good to fall.

The substitution effect of a price change implies that as the price of a good falls, people are likely to buy less of the good whose price has fallen.

If a technological advance makes it possible to produce bananas at a lower cost:

Suppose that in October the price of a cup of cafe latte was $1.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 600 lattes were consumed. What might have caused this change?

Figure 4.3 -Figure 4.3 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $50, we would expect that:

An increase in demand will cause the equilibrium price and quantity to rise.

Minimum wage laws are examples of

Recall Application 4, "The Bouncing Price of Vanilla Beans," to answer the following questions: -The higher prices of vanilla beans in 2003 can be illustrated as a movement along the supply curve.

Suppose that people expect that the price of orange juice will fall next month. We would predict that the equilibrium quantity of orange juice will _______ and the equilibrium price of orange juice will _______ this month.

Figure 4.4 -Figure 4.4 illustrates the demand for guitars. Assume that guitars and guitar strings are complements. An increase in the price of guitar strings would bring about a movement from:

Figure 4.5 -Figure 4.5 illustrates the supply of guitars. An increase in the supply of guitars is represented by a movement from:

Figure 4.6 -Figure 4.6 illustrates a set of supply and demand curves for a product. When the economy moves from point B to point C, there has been:

If the number of beer producers decreases:

Assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases:

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. In this market, we would expect that:

At a price of $1000, Dell Computer Co. is willing 20 laptops and Compaq is willing to sell 40 laptops. IBM will only sell laptops if the price is $1300 or higher. From the point of view of IBM, $1300 is the:

Lettuce and spinach are substitute goods. All else equal, if a spinach beetle destroys half of the nation's spinach crop, we predict that the equilibrium price of lettuce will _______and the equilibrium price of spinach will _______.