Exam 3: Where Prices Come From: The Interaction of Demand and Supply

In most countries in South America,the legal driving age is 18.If the legal driving age in the United States was raised from 16 to 18,how would this affect the market for new and used automobiles? What would happen to the equilibrium price and quantity of new and used automobiles?

An increase in the equilibrium price for a product will result

Figure 3-1 -Refer to Figure 3-1.An increase in taste or preference would be represented by a movement from

Studies have shown that smoking cigarettes can cause heart disease.Assume this is true,and favorable weather has increased the tobacco harvest in North Carolina.In the market for cigarettes,these two developments would

A(n)________ is represented by a rightward shift of the demand curve while a(n)________ is represented by a movement along a given demand curve.

In recent years,the demand for orange juice in the United States has fallen and the supply of orange juice has also fallen,with the decrease in supply being larger than the decrease in demand.In this situation,the equilibrium price of orange juice will have ________ and the equilibrium quantity of orange juice will have ________.

If the quantity demanded for a product exceeds the quantity supplied,the market price will rise until

Cole was discussing the market for cocoa beans with his friend John Schmidt.Cole said,"Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years,the price of cocoa beans has been rising and rising and people are buying more and more.I think the demand for cocoa beans must be upward sloping." Is Cole right? Briefly explain why or why not.

Figure 3-1 -Refer to Figure 3-1.An increase in the price of a substitute would be represented by a movement from

If in the market for bananas the supply curve has shifted to the right,then

Explain the difference between substitutes and complements.

Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right,but the supply curve shifts less than the demand curve.As a result

The income effect explains why there is usually a direct relationship between the price of product and the quantity of the product demanded.

In September,buyers of silver expect that the price of silver will rise in October.What happens in the silver market in September,holding all else constant?

A decrease in the demand for eggs due to changes in consumer tastes,accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu,will result in

Table 3-2 -Refer to Table 3-2.The table above shows the demand schedules for cashews of two individuals (Jordy and Amy)and the rest of the market.If the price of cashews falls from $4 to $2,the market quantity demanded would

When the price of a good rises,consumers buy a smaller quantity because of the ________ effect and the ________ effect.

Use the following demand schedule for cherries to draw a graph of the demand curve.Be sure to label the demand curve and each axis,and show each point on the demand curve.

Figure 3-4 -Refer to Figure 3-4.If the price is $20

Figure 3-8 -Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₁ (point A). If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles, the equilibrium could move to which point?