Exam 3: Demand, Supply, and the Market Process

A recent editorial in a local newspaper argues, "Consumers need to know more about products than just their price. They need to know how these prices are determined, who owns the businesses, and the wages of the workers." Is the editorial writer correct? Why or why not?

Susan says, "If the price of wool coats goes up, suppliers will offer more of the coats for sale." Brad replies, "It takes three months to harvest wool and employ all the steps necessary to produce a wool coat. Quantity supplied cannot possibly increase for three months." Is Brad correct? Why or why not?

Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply.

The total economic cost of producing a good or service is called the

Ceteris paribus, a decrease in the price of a good will cause the

If consumer purchases of a good are not very sensitive to the price of the good, this is illustrated by a

If coffee and cream are complements, an increase in the price of coffee will cause

Suppliers recognize there is a shortage in the market for their product when they notice that

Other things constant, a decrease in consumer income will

If air travel and bus travel are substitutes,

Figure 3-20 -Refer to Figure 3-20. At the equilibrium price, producer surplus is

When there is excess demand for a product in a market,

Table 3-2 -Refer to Table 3-2. If the market price is $1,100, the combined total cost of all participating sellers is

Consider the market for grapes. An increase in the wage paid to grape pickers will cause the

Suppose the demand for tacos decreases. What will happen to producer surplus in the market for tacos?

Liam is willing to cut lawns for a minimum of $200 a week. He is, however, paid $250 for the same service by a lawn maintenance company. This is an example of

Figure 3-10 -Figure 3-10 illustrates the conditions of demand and supply in the market for compact discs. Indicate the equilibrium price and quantity.

Use the figure below to answer the following question(s). Figure 3-13 -Refer to Figure 3-13. The market for margarine was initially in equilibrium at point

Figure 3-20 -Refer to Figure 3-20. If 110 units of the good are being bought and sold, then

Table 3-1 -Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is