Exam 3: Supply and Demand Theory

Exhibit 3-17 -Refer to Exhibit 3-17. At a price of $20, the quantity demanded of good X is ____________ than the quantity supplied of good X, and economists would use this information to predict that the price of good X would soon ______________. This would push the price __________ the equilibrium price.

Economists use the terms neutral good and normal good interchangeably.

A "decrease in demand" means that

Exhibit 3-6 -Refer to Exhibit 3-6. If an increase in income causes the demand for good X to shift from D₁ to D₂,then good X is

Good X is a normal good. If the average income of those who buy good X rises, the _____________ curve for good X will shift ____________ resulting in a(n) _____________ in the equilibrium price of X and a(n) ____________ in the equilibrium quantity of X.

Exhibit 3-11 -Refer to Exhibit 3-11. Fill in blanks (A) and (B) respectively with "Exchange" or "No Exchange" to indicate whether or not exchange would take place at the given prices.

Which of the following is true about the relationship between price and quantity supplied?

Exhibit 3-10 -Refer to Exhibit 3-10. $20 is the

Exhibit 3-9 -Refer to Exhibit 3-9. Consumers view X and Y as substitutes. If the price of Y increases as a result of a decrease in the supply of Y, an economist would expect a movement in the market for X from

Suppose Smith wants one iPhone no matter what the price is between $0 and $350, Jones wants one iPhone no matter what the price is between $0 and $200, and Griffith wants one iPhone no matter what the price is between $0 and $450. In this case, each individual buyer's demand curve will be __________________ and the market demand curve will be __________________.

The fundamental reason why most supply curves are upward sloping is that

Exhibit 3-1 -Refer to Exhibit 3-1. Equilibrium price and quantity are ____________________, respectively.

The price of X was $10 in year 1 and $14 in year 2. Which of the following could be the correct reason for the rise in price?

An increase in the expected price of corn would likely do the following to the current supply and demand for corn:

One can determine the consumers' surplus if the _______________ are known.

At a price for which quantity demanded exceeds quantity supplied, a __________ is experienced, which pushes the price __________ toward its equilibrium value.

An "increase in the quantity demanded" means that

When Hurricane Katrina hit the Gulf Coast of the United States in 2005 it destroyed 5,000,000 acres of timber. Given that lumber is timber that has been sawed or split into planks and boards, explain in terms of supply and/or demand how the hurricane impacted each of the following markets (be sure to note the expected resulting impact on equilibrium price and quantity): a.Domestic lumber b.Imported lumber c.New home construction

When the price of a good is $5, the quantity demanded of a good is 30 units, and the quantity supplied of the good is 50 units. For every $1 decrease in the price of this good, quantity demanded rises by 5 units and quantity supplied falls by 5 units. The equilibrium price of this good is ___________and the equilibrium quantity of this good is _________ units.

As the price of good A rises as a result of a decrease in the supply of good A, the demand for good B rises. Therefore, goods A and B are