Exam 3: B: Supply, Demand, and the Market Process

Which of the following would most likely increase the price of automobiles?

Use the figure below to answer the following question(s). Figure 3-3 -In Figure 3-3, if the initial demand for margarine were D₁, the impact of a decrease in the price of butter, a substitute good for margarine, would be illustrated as

If the price of tickets to the World Series were set below the equilibrium price,

Which of the following would most likely cause the current demand for DVD players to fall?

If we observe a decrease in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by

Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply.

Which of the following would most likely decrease the price of beef?

Just before Valentine's Day, the price of roses increases dramatically. This is because

Suppose demand decreases and supply decreases. Which of the following will happen?

Figure 3-18 -Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to new buyers entering the market?

If Georgia experiences a late frost that damages the peach crop, we should expect the

Figure 3-7 -In Figure 3-7, suppose D₁ and S₁ indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D₁ to D₂ in the market for ice cream?

Suppose both the equilibrium price and quantity rise for a particular product. Which of the following best explains this situation?

A recent editorial in a local newspaper argues, "Consumers need to know more about products than just their price. They need to know how these prices are determined, who owns the businesses, and the wages of the workers." Is the editorial writer correct? Why or why not?

Figure 3-19 -Refer to Figure 3-19. Sellers whose costs are greater than price are represented by segment

"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.

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

All things constant, a decrease in bus, train, and airplane fares will

Figure 3-19 -Refer to Figure 3-19. Buyers who value this good more than price are represented by which line segment?

If we observe an increase in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by