Exam 3: Demand, Supply, and the Market Process

Figure 3-18 Refer to Figure 3-18. Which area represents consumer surplus at a price of P₂?

According to economic theory, which of the following would most likely cause the demand curve for hamburgers to decrease?

In a competitive market economy, a resource in short supply will be allocated

An increase in the price of metal raises the cost of manufacturing dishwashers. As a result, the market changes to a new equilibrium because of

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

Figure 3-22 Refer to Figure 3-22. Which of the four graphs represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Which of the following is a major implication of the invisible hand concept?

"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What famous economist made this statement?

In Atlanta, tickets for professional and college football games are substitutes. An increase in the ticket price for professional football, other things being equal, will

If a small percentage increase in the price of a good results in a rather large percentage increase in the quantity supplied of the good, supply is said to be

How would a decrease in consumer income affect the market for lawn mowers?

If the demand for a good is relatively inelastic, this means that consumer purchases of the good are

Market prices provide information to consumers, helping them coordinate their activities so long as

Figure 3-5 In Figure 3-5, if the initial demand for margarine were D₁, an increase in the price of butter, which is a substitute for margarine, would tend to cause which of the following changes in the market for margarine?

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause

"The operator of the tunnel that links Britain and France, Eurotunnel, said that commercial and tourist traffic using its car and coach shuttle service had fallen sharply in 2004, leading to a drop in operating revenues of 4%. Eurotunnel's chief executive, Jean-Louis Raymond, blamed cut-throat competition from budget airlines." (news story, January 2005) a.If Mr. Raymond is correct, are the services of airlines and Eurotunnel substitutes or complements? b.Use demand and supply analysis to explain how lower airfares between Paris and London impact the market for the shuttle services of Eurotunnel.

In a typical college town, when students go home for the summer, the demand for many items such as pizza and textbooks

Which of the following would most likely increase the demand for peanut butter?

During a major war between two oil producing nations, there would likely be

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Consumer surplus for the three individuals is