Exam 3: Supply and Demand

Use the following to answer questions: -(Figure: Demand and Supply of Gasoline) Use Figure: Demand and Supply of Gasoline. Given the equilibrium after a change in supply from S₁ to S₂:

Equilibrium quantity will always increase if:

If people demand more of product A when the price of B falls, then A and B are:

Use the following to answer questions: -(Figure: Shifts in Demand and Supply III) Use Figure: Shifts in Demand and Supply III. The figure 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 in consumption of snowboards?

If the United States increases tariffs on imports of lumber from Canada (which raises the price of lumber in the United States), the equilibrium price of new homes in the United States will _____ and the equilibrium quantity of new homes in the United States will _____.

Use the following to answer questions: -(Figure: Shifts in Demand and Supply IV) Use Figure: Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose half of the people in San Diego pack up and move to Colorado Springs. Which panel BEST describes how this will affect the supply of houses in San Diego?

Suppose the local real estate market is in equilibrium. A recession causes local household incomes to decline. At the same time, construction of a large subdivision of new homes has just been completed. Given these two changes and assuming that real estate is a normal good, we can predict that the price of real estate will _____ and the quantity of real estate bought and sold will _____.

An increase in the price of contact lenses will increase the supply of contact lenses.

Market equilibrium occurs when:

Suppose you manage a corner grocery store. If peanut butter is an inferior good, what do you suppose would happen to the price and quantity sold of peanut butter as incomes fell during a recession?

Use the following to answer questions: -(Figure: Demand for Coconuts) Use Figure: Demand for Coconuts. If coconuts are a normal good and the income level of consumers falls, it will be represented in the figure as a:

Which factor would shift the demand curve for new textbooks to the right?

A shift of the demand curve for thin-crust pizza would NOT be caused by a change in:

Use the following to answer questions: -(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure 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?

Which statement BEST exemplifies the law of demand?

Use the following to answer questions: -(Figure: Shifts in Demand and Supply) Use Figure: Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel BEST describes how this will affect the market for tomatoes?

Use the following to answer questions: -(Table: The Lemonade Market) Use Table: The Lemonade Market. If the price of lemonade is $1.25 per cup, we expect to see a:

Use the following to answer questions: -(Figure: Supply and Demand in the Orange Juice Market) Use Figure: Supply and Demand in the Orange Juice Market. The market is in equilibrium at point C. A reputable scientist asserts in a major scientific publication that drinking orange juice will increase your life span. What will be the MOST likely new equilibrium point in the orange juice market?

A major input into vanilla ice cream is cream. An increase in the price of cream will reduce the quantity of vanilla ice cream supplied, but it will not reduce the supply of vanilla ice cream.

Use the following to answer questions: -(Figure: Shifts in Demand and Supply IV) Use Figure: Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose oil becomes more expensive. Which panel BEST describes how this will affect the market for gasoline, which is made from oil?