Exam 4: Bringing Supply and Demand Together

FIGURE 4-3 -Refer to Figure 4-3.Starting with initial curves D₀ and S₀,which movement is consistent with an increase in both income and population,assuming that wool products are normal goods?

Serious natural disasters like hurricanes and tornadoes cause widespread and extensive damage to buildings.As a result of a natural disaster,what would you expect to happen in the market for building supplies?

What could explain an increase in the price and in the number of units sold of flour?

FIGURE 4-1 -Refer to Figure 4-1.If a price ceiling of $2 is imposed,how many units of butter will be sold?

Which action will always result in a shortage?

Which of the following statements describes equilibrium in a market?

TABLE 4-4 -Refer to Table 4-4.If the government intervenes in the market for milk and sets a price floor of $1.20,what will be the result?

When prices in a market are fixed either above or below the equilibrium price,what is the result?

Markets tend toward equilibrium and,as a result,will tend to eliminate shortages and surpluses.Why?

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $1.50 per loaf,what will be the result?