Exam 4: Demand, Supply, and Market Equilibrium

Recall the Application about the decline in honeybee colonies and its effect on the price of ice cream to answer the following question(s). In the last few years thousands of honeybee colonies have vanished, a result of bee colony collapse disorder (CCD). Roughly one third of the U.S. food supply--including a wide variety of fruits, vegetables, and nuts--depends on pollination from bees. The decline of honeybees threatens $15 billion worth of crops in the United States. -This Application exemplifies how a change in ________ in one market impacts the ________ in a different market.

If the number of automobile manufacturers decreases,

Governments sometime create an excess demand for a product by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product. This is known as a price floor.

As the price of a product falls, the demand for the product increases, ceteris paribus.

Explain what will happen to the equilibrium price and quantity of hybrid automobiles if there are technological advancements in the production of hybrid automobiles while at the same time consumer preference for hybrid automobiles increases.

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

-Figure 4.5 illustrates a set of supply and demand curves for hamburgers. A decrease in demand and a decrease in quantity supplied are represented by a movement from

The law of demand states that there is a negative relationship between price and quantity demanded, ceteris paribus.

-Figure 4.4 illustrates the supply of tacos. If the government offered a subsidy to Mexican restaurants for each taco they produce, this would most likely cause a movement from

-Figure 4.5 illustrates a set of supply and demand curves for hamburgers. A decrease in supply and a decrease in demand are represented by a movement from

In the event of excess supply in the coffee market

Recall the Application about the increase in Chinese demand for pecans to answer the following question(s). Between 2006 and 2009, Chinese imports of U.S. pecans increased from 9 million pounds per year to 88 million pounds per year, and as a result of the increase in demand, the equilibrium price increased by about 50 percent. The increase in demand was caused in part by widespread reports in the Chinese media extolling the health benefits of pecans. -According to this Application, between 2006 and 2009, Chinese demand for pecans increased by roughly ________ percent.

Describe the changes in the variables that will cause demand for a product to increase, shifting the demand curve to the right.

Suppose that in 2011, 4 million plasma TVs were purchased at $950 each, while in 2012, 3 million plasma TVs were purchased at $800 each. What might have caused this change?

-Figure 4.5 illustrates a set of supply and demand curves for hamburgers. An increase in supply and an increase in demand are represented by a movement from

4.3 Market Equilibrium: Bringing Demand and Supply Together -Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $7, there is an

A decrease in the cost of production will shift the supply curve down and to the right.

Suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit

If supply of a product increases and demand for the product decreases, equilibrium quantity will definitely change.

4.3 Market Equilibrium: Bringing Demand and Supply Together -Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $10, we would expect that