Exam 4: The Market Forces of Supply and Demand

Figure 4-4 -Refer to Figure 4-4. If the price is $25, what would happen?

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have risen over time. Which of the following would be most consistent with this observation?

What can be said about economists in general?

What might be the reason when quantity demanded has increased at every price?

What could be one result of a cold snap in Florida?

Market demand is given as Qd = 120 - P. Market supply is given as Qs = 4P. What would result if the market price were $15?

Market demand is given as Qd = 40 - 2P. Market supply is given as Qs = 2P. What would result if the market price were $7?

Quantity demanded is equal to quantity supplied, at the equilibrium price.

It is not possible for demand and supply to shift at the same time.

Table 4-1 The table shows individual demand schedules for a market. -Refer to Table 4-1. When the price of the good is $1.00, what is the quantity demanded in this market?

Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $20?

Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and quantity have changed. a.Winter starts and the weather turns sharply colder. b.The price of tea, a substitute for hot chocolate, falls. c.The price of cocoa beans decreases. d.The price of whipped cream falls. e.A better method of harvesting cocoa beans is introduced. f. The Canadian Medical Association announces that hot chocolate cures acne.g. Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.h. Consumer income falls because of a recession and hot chocolate is considered a normal good. i. Producers expect the price of hot chocolate to increase next month. j. Currently, the price of hot chocolate is $0.50 per cup above equilibrium.

Figure 4-1 -Refer to Figure 4-1. What is the movement from S to S₁ called?

Which of the following is correct?

Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then what could we safely conclude would happen to the equilibrium price of a new DVD?

Which of the following would definitely result in a higher price in the market for Snickers?

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied, what do we know?

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

Figure 4-6 -Refer to Figure 4-6. What is the shift from D to D₁ called?

Suppose that the Canadian Medical Association announces that men who shave their heads are less likely to die of heart failure. What could we expect to happen?