Exam 4: Bringing Supply and Demand Together

FIGURE 4-5 -Refer to Figure 4-5. At price PR, which of the following will occur?

TABLE 4-2 -Refer to Table 4-2. Suppose the demand schedule for Good A changes from D₁ to D₂ because the price of a related good, Good B, decreases. Based on this, what can we conclude?

FIGURE 4-3 -Refer to Figure 4-3. Starting with initial curves D₀ and S₀, which movement is consistent with a decrease in the price of cotton (a substitute)?

Hamburgers and fries are viewed by consumers to be complements. If the price of hamburgers falls, what will happen in the market for fries?

If the soccer ball market is in equilibrium at a price of $22 per ball, an increase in the demand for soccer balls will cause a shortage at that price.

A major grocery store chain switches from bagging groceries in paper sacks to bagging them in plastic bags. The grocery chain demands more plastic bags than are available at the current market price. What will happen as a result of this?

TABLE 4-5 -Refer to Table 4-5. What is the equilibrium price?

Ceteris paribus, if the market demand for a product decreases, what will happen to the equilibrium quantity and equilibrium price?

Which of the following statements describes equilibrium in a market?

If both the supply and demand curves shift to the left, what can we expect?

The diagram below represents the market for butter. FIGURE 4-1 -Refer to Figure 4-1. What is the shortage or surplus that exists at a market price of $4?

A March 2009 article in the Zimbabwe Herald indicates that the government there has removed price controls on certain foodstuffs and household items. What result would you expect from this action?

If the market for peaches is in equilibrium at $2.99 per pound, a decrease in the supply of peaches will cause a surplus of peaches at that price.

A surplus exists in the market for Barbie dolls at the prevailing price. What will eliminate the surplus?

If Canadian consumers decided to boycott grapes to protest working conditions of farm workers, everything else being equal, what can we expect?

What could explain an increase in the price and in the number of units sold of flour?

In 1975, a pocket calculator cost more than $50; in 1990, a calculator of the same quality cost less than $10. Which of the following explanations is most consistent with these facts?

Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, what caused the increase in the price of Coke?

Wool and cotton can both be used to manufacture clothing in the garment industry. Suppose that bad weather destroys cotton crops at the same time that the price of wool increases significantly. What is likely to be the impact on the market for cotton?

If the price of ice cream increases substantially (ceteris paribus), what is the equilibrium quantity of hot fudge sauce likely to do?