Exam 3: Supply and Demand

Use the following to answer questions: Figure: The DVD Rental Market -(Figure: The DVD Rental Market) Look at the figure The DVD Rental Market. If the rental price of DVDs rises from $5 to $7:

Which of the following statements is CORRECT?

If goods A and Z are complements, an increase in the price of good Z will:

Many public utilities burn oil to generate electricity. If the price of oil increases, we expect a shift to the _____ in the _____ curve for _____ and a _____ price for electricity

When the price of gas goes down, the demand for tires goes up. A likely possibility is that tires and gas are:

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

An increase in the supply of a good is caused by:

Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price of its motorcycles, we can expect:

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 _____.

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: The DVD Rental Market -(Figure: The DVD Rental Market) Look at the figure The DVD Rental Market. At a rental price of $3, there will be:

Use the following to answer questions: Figure: Supply of Coconuts -(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the price of coconuts decreased, it would be represented in the figure as a movement from:

Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette cheese over boiled new potatoes. If the price of Raclette cheese decreased, we would expect to see:

A shift of a demand curve to the right, all other things unchanged, will:

Use the following to answer questions: Figure: Shifts in Demand and Supply IV -(Figure: Shifts in Demand and Supply IV) Look at the 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?

Which of the following is TRUE of an inferior good?

Use the following to answer questions: Figure: Demand and Supply of Gasoline -(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. When the supply curve shifted from the initial equilibrium, the new intersection of supply and demand has a price of _____ and quantity of 400. This supply shift could have resulted from _____.

The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that in the market for flights:

Use the following to answer questions: Figure: Shifts in Demand and Supply IV -(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose the price of lumber falls dramatically. Which panel BEST describes how this will affect the market for new houses?

Consider the supply curve for cotton shirts. An increase in the price of cotton will: