Exam 4: Demand,supply,and Market Equilibrium

Suppose that a natural disaster substantially increases the cost of producing cheese.We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________.

If the price of crude oil (an input to the production of gasoline)increases,then we will expect to see

Figure 4.4 -Figure 4.4 illustrates the demand for guitars.An increase in the number of guitar players in the market would bring about a movement from

Recall the Application about the decrease in the price of wool in the 1990s to answer the following question(s). In the 1990s, the world price of wool decreased by about 30 percent and prices have remained relatively low since then. In 2012, an organization in New Zealand proposed that sheep shearing be added to the Commonwealth Games and the Olympics as a spectator sport in an effort to increase the awareness and the demand for wool. -According to the Application,the policies proposed to help raise the price of wool focuses on

Figure 4.4 -Figure 4.4 illustrates the demand for guitars.Assume guitars are a normal good.An increase in income would bring about a movement from

Figure 4.7 -If demand and supply decrease in Figure 4.7,then the equilibrium

Suppose that a new study is released stating that consumption of orange juice (a substitute for apple juice)reduces the risk of cancer,and a major freeze destroys half of the country's apple crop.What happens to the price and quantity of apple juice?

If the cost of producing a good goes down,this will cause the equilibrium price of the good to go down and the equilibrium quantity of the good to go up.

Figure 4.5 -Figure 4.5 illustrates the supply of guitars.A decrease in the supply of guitars is represented by a movement from

Suppose that in 2015,12 million cars were purchased at $25,000 each,while in 2016,10 million cars were purchased at $22,000 each.What might have caused this change?

Figure 4.6 -Figure 4.6 illustrates a set of supply and demand curves for a product.If the good were inferior and the consumer's income decreases,then this can be illustrated as moving from point

Figure 4.6 -Figure 4.6 illustrates a set of supply and demand curves for a product.When the market moves from point A to point B,there has been

Recall the Application about the decrease in taxes on cigarettes in several Canadian provinces in 1994 to answer the following question(s). -According to the Application,what was the reason the Canadian government decreased the tax rates of cigarettes?

Figure 4.3 -Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $50,we would expect that

Suppose that ramen noodles are an inferior good.When income decreases,the equilibrium quantity of ramen noodles will ________ and the equilibrium price of ramen noodles will ________.

If sellers have an expectation of lower future prices,

Suppose that people expect that the price of orange juice will rise next month.We would predict that the equilibrium quantity of orange juice will ________ and the equilibrium price of orange juice will ________ this month.

The market equilibrium price and quantity can be affected if

Figure 4.5 -Figure 4.5 illustrates the supply of guitars.An increase in the number of guitar manufacturers would most likely cause a movement from

Recall the Application about the decrease in price of illegal drugs in the United States to answer the following question(s). -According to the Application,what did the Justice Department identify as the explanation for why (illegal)drug prices have been dropping?