Exam 4: Bringing Supply and Demand Together

FIGURE 4-3 -Refer to Figure 4-3. Starting with initial curves D₀ and S₀, which movement is consistent with technological improvements in wool mills?

If the Canadian Auto Workers union obtains a substantial wage increase for its workers, the price of automobiles will rise. What kind of shift can this price increase be attributed to?

TABLE 4-2 -Refer to Table 4-2. Suppose the supply schedule for Good A changes from S₁ to S₂ because the price of Good B increases. Based on this, what can we conclude?

Nick is delighted to see that the price of his favourite food, black olives, has fallen. Which of the following could be responsible?

Prices have soared for parking facilities in downtown Toronto in recent months. Pressure from voters has convinced the Toronto City Council to impose a price ceiling of $5 on all parking garages and lots per day. What effect will this likely have on the market for parking spaces in Toronto? Who will gain? Who will lose?

If a surplus currently exists in the market for apples, which of the following statements is most accurate?

As the price of DVD players has fallen over the last two years, more DVD players have been sold by consumer electronics firms. Is this a violation of the law of supply?

How would apple growers react to the news of medical research findings that suggest that eating apples, leads to greater health benefits than were previously known?

Assume a price floor is imposed in the market for milk at the current equilibrium price, and that a price ceiling is imposed in the market for natural gas at the current equilibrium price. What will an increase in demand for both milk and natural gas create?

In high schools, all teachers are paid the same based on years of experience, regardless of specialization. Beginning in the 1970s, a shortage of science and math teachers developed as private industry paid more for math and science skills than schools could offer. At the same time, a decline in the number of school-age children reduced the demand for all other teachers, which led to a surplus. An economist might suggest what sort of solution for both the resulting shortage and surplus?

Which of the following is NOT likely to result from an increase in the federal minimum wage?

Starting from an initial equilibrium price, a surplus at that price can be created either by an increase in supply or a decrease in demand.

What will occur in the market when there is an excess quantity demanded of a product at the current price?

FIGURE 4-4 -Refer to Figure 4-4. Starting with initial curves D₀ and S₀, which movement is consistent with an increase in both demand and supply?

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. What would an economist have expected to happen to the price and quantity sold of Retin-A after this announcement?

The diagram below represents the market for butter. FIGURE 4-1 -Refer to Figure 4-1. If a price floor of $4 is imposed, how many units of butter will be sold?

Assume a price floor is imposed in the wheat market at the equilibrium price, and that a price ceiling is imposed in the gasoline market at the equilibrium price. What will an increase in supply in both the wheat and gasoline markets create?

FIGURE 4-3 -Refer to Figure 4-3. Starting with initial curves D₀ and S₀, which movement is consistent with a successful advertising campaign that claims wool keeps you warm?

TABLE 4-4 -Refer to Table 4-4. If the government intervenes in the market for milk and sets a price floor of $1.20, what will be the result?

A more efficient process for refining oil into gasoline is developed. What will happen to the market price and quantity of gasoline as a result of this?