Exam 4: The Market Forces of Supply and Demand

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto workers accept lower wages, and automobile insurance becomes more expensive?

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly (a complementary good) fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Table 4-3 -Refer to Table 4-3. What is the space that would represent an increase in equilibrium price and an indeterminate change in equilibrium quantity?

In a free market, who determines how much of a good will be sold and the price at which it is sold?

What is an example of a perfectly competitive market?

What does a demand curve illustrate?

Suppose that the number of buyers in a market increases and a technological advancement occurs. What would we expect to happen in the market?

What happens when there is a shortage in a market?

Figure 4-5 -Refer to Figure 4-5. Graph C shows which of the following?

What will happen if the price of a good is low?

If Francis receives a decrease in his pay, what would we expect?

What will a technological advancement do?

On what basis is a good considered either a normal good or an inferior good?

If the supply of a product decreases, what would we expect?

Which of the following would NOT shift the demand curve for a good or service?

If the demand for a good falls when income falls, the good is called an inferior good.

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline falls, the price of steel increases, public transportation becomes more expensive and less comfortable, auto workers receive higher wages, and automobile insurance becomes less expensive?

If the demand for a product decreases, what would we expect?

What determines a market supply curve?

Once the demand curve for a product or service is drawn, what is possible?