Exam 3: Supply and Demand

Use the following to answer questions: Figure: Supply and Demand in the Orange Juice Market -(Figure: Supply and Demand in the Orange Juice Market) Look at the 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?

The law of demand states that other things equal, as the price:

The law of demand implies that:

Suppose that supply increases and demand decreases. What is the most likely effect on price and quantity?

Use the following to answer questions: Figure: The Demand and Supply of Wheat -(Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. A temporary price of $2 in this market would result in a _____ of _____ bushels.

Consider the market for iPods. What happens if a fantastic new alternative MP3 player is developed and at the same time a boat carrying a large shipment of iPods is attacked by pirates and sunk?

A decrease in supply means:

Use the following to answer questions: Figure: Shifts in Demand and Supply II -(Figure: Shifts in Demand and Supply II) Look at the figure Shifts in Demand and Supply II. The figure shows how supply and demand might shift in response to specific events. Suppose the technology for producing ethanol fuel improves. Which panel BEST describes how this will affect the market for ethanol?

An increase in demand with no change in supply will lead to _____ in equilibrium quantity and _____ in equilibrium price.

When the economy turns down and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for this phenomenon?