Exam 3: Demand, Supply, and the Market Process

Graphically, the area that represents the difference between the market price and the minimum price required to induce suppliers to produce a good is called

Use the figure below to answer the following question(s). Figure 3-9 Given the demand ( D ) and supply ( S ) for gasoline in Figure 3-9, if the price of gasoline were $1 per gallon,

An increase in the expected future price of a good will cause the current demand for the good to

Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P ₁?

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Use the figure below to answer the following question(s). Figure 3-9 In Figure 3-9, if D and S represent the demand and supply for gasoline, what is the equilibrium price and quantity?

Which of the following would be the best example of consumer surplus?

Assume that supply decreases greatly and demand decreases slightly. Which of the following will happen?

If consumer purchases of a good are not very sensitive to the price of the good, economists say the demand for the good is relatively

Figure 3-18 Refer to Figure 3-18. When the price falls from P ₁ to P ₂, which area represents the increase in consumer surplus to existing buyers?

Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P ₂?

Assume that supply increases greatly and demand increases slightly. Which of the following will happen?

Use the figure below to answer the following question(s). Figure 3-13 Refer to Figure 3-13. The market for margarine was initially in equilibrium at point e. Other things constant, an increase in the price of soybean oil, an important ingredient used to produce margarine, would likely move the equilibrium in this market toward point

Adam Smith's invisible hand principle stresses

If the price of a good is below the equilibrium price,

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?

Figure 3-20 Refer to Figure 3-20. If the price decreases from $22 to $16, consumer surplus increases by

Consumer surplus is the area on the graph

According to the law of supply, as the price of a good falls,

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south?