Exam 3: Demand and Supply

After the price of milk increases, David buys more eggs and less cereal. For David,

Morgan graduates from college and gets a job paying $50,000 a year. While in school, she consumed 4 pounds of chicken and 1 pound of shrimp a month. After she starts work, she consumes 2 pounds of chicken and 3 pounds of shrimp a month. If everything else is held constant, we know that

-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?

-In the above figure, what would result if the price was $40?

If a good is a normal good, an increase in income will

The price of a commodity in terms of another commodity is

Explain why there is a direct relationship between price and quantity supplied.

An increase in quantity demanded is caused by

If an increase in the incomes of people who live in the Los Angeles area leads to an increase in the demand for season tickets for games played by the Los Angeles Lakers professional basketball team, then these season tickets are

A demand schedule

Other things being equal, an increase in the price of a good leads to a decrease in the amount people purchase. This is known as

The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?

An improvement in technology in the production of computers would

-Refer to the above figure. The arrows show the direction of a shift in the demand curve of Good A. Which of the following would be the most likely reason for the shift in the demand curve if Good A is an inferior good?

A demand curve is a

-Refer to the above figure. Which diagram shows the effect on the market of Corn Flakes when the price of Corn Flakes has increased?

Which of the following will shift today's supply curve to the right?

Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are

-Refer to the above figure. Which panel demonstrates the law of supply?

John believes that when the price of a good increases people will purchase more of the good. This statement is