Exam 4: Supply and Demand: an Initial Look

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that borrowers pay.As a result, economists expected demand for money to

Why are sellers willing to sell more at a higher price?

An increase in price will decrease demand.

During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities.The result of this legislation was

If the supply curve for housing has the normal positive slope, rent controls will likely

A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.

Assume a new technology further reduces the cost of producing calculators.Also assume that consumers have cut back on their scheduled purchases in anticipation of even more cost-saving developments.As a result, we can expect

Figure 4-21 -At price P₁ in Figure 4-21, what will tend to happen?

The price of coal fell and the quantity sold also fell.Everything else being equal, it is consistent that

After Hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators, and bottled water.If governments followed the consumers' demands and imposed price ceilings in these markets, what is the likely result?

Technological advances shift the supply curve rightward.

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate.What happens to quantity of money demanded if the interest rate increases?

When price is below the equilibrium level, there is a shortage of the commodity being sold.

A decrease in the price of VCRs will increase demand for video cassettes.

Define equilibrium as it relates to markets.Describe the process by which a market reaches a new equilibrium.Include an appropriate diagram.

A shift in the supply curve of bicycles resulting from higher steel prices will lead to

An increase in the number of nursing homes and community health centers and the expansion of home care has led to an increase in the demand for nurses.At the same time, improving opportunities for women in business have reduced the supply of nurses.Hospitals, the major employers of nurses, have resisted wage increases.The resulting situation could be described as

A shortage occurs when price is higher than the market equilibrium.

Assume the demand schedule for cookies is downward sloping.If the price of cookies falls from $1.50 to $1.25 per dozen,

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