Exam 4: Bringing Supply and Demand Together

TABLE 4-2 -Refer to Table 4-2.If D₁ and S₁ represent the demand and supply schedules in a particular market,then what are the equilibrium price and quantity in that market?

FIGURE 4-2 -Refer to Figure 4-2.Under what circumstances would a movement from S₁ to S₂ occur?

FIGURE 4-2 -Refer to Figure 4-2.Under what circumstances would a movement from D₁ to D₂ occur?

After a cruise ship is hijacked at sea by terrorists,fearful consumers seek to take their vacations on land.At the same time,cruise employees demand and receive higher wages.What is the effect on the market for cruise vacations?

A major grocery store chain switches from bagging groceries in paper sacks to bagging them in plastic bags.The grocery chain demands more plastic bags than are available at the current market price.What will happen as a result of this?

Assume a price ceiling is imposed at the current equilibrium price in the market for wheat.If the supply of wheat then decreases as a result of bad weather,what will result?

Assume a price floor is imposed in the market for milk at the current equilibrium price,and that a price ceiling is imposed in the market for natural gas at the current equilibrium price.What will an increase in demand for both milk and natural gas create?

If market demand decreases and market supply increases,what will happen to the equilibrium quantity and equilibrium price?

If the soccer ball market is in equilibrium at a price of $22 per ball,an increase in the demand for soccer balls will cause a shortage at that price.

A more efficient process for refining oil into gasoline is developed.What will happen to the market price and quantity of gasoline as a result of this?

There is an increase in demand for personal computers at the same time their input costs fall.What can we expect?

A March 2009 article in the Zimbabwe Herald indicates that the government there has removed price controls on certain foodstuffs and household items.What result would you expect from this action?

TABLE 4-3 -Refer to Table 4-3.Assuming the market for gasoline is initially in equilibrium and that sport utility vehicles have very high fuel consumption,what is likely to happen when there is a significant decrease in the price of sport utility vehicles?

How would apple growers react to the news of medical research findings that suggest that eating apples,leads to greater health benefits than were previously known?

FIGURE 4-1 -Refer to Figure 4-1.If the current price of butter equals $5,what is the result in the market?

The main purpose of government price controls is to keep prices at equilibrium levels.

At the current market price for milk,the quantity of milk that sellers are willing and able to sell falls short of the quantity that buyers are willing and able to purchase.What is occurring in this situation?

With knowledge about the direction (but not magnitude)of simultaneous supply and demand curves shifts,one can always determine the direction of changes in both equilibrium price and quantity.

Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties.What would an economist have expected to happen to the price and quantity sold of Retin-A after this announcement?

In 1975,a pocket calculator cost more than $50; in 1990,a calculator of the same quality cost less than $10.Which of the following explanations is most consistent with these facts?