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

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:

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Question 1

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C

Table 3.1 -Refer to Table 3.1.The table contains information about the corn market.Use the table to answer the following questions. a. What are the equilibrium price and quantity of corn? b.Suppose the prevailing price is $9 per bushel.Is there a shortage or a surplus in the market? c.What is the quantity of the shortage or surplus? d.How many bushels will be sold if the market price is $9 per bushel? e.If the market price is $9 per bushel, what must happen to restore equilibrium in the market? f.At what price will suppliers be able to sell 22 000 bushels of corn? g.Suppose the market price is $21 per bushel.Is there a shortage or a surplus in the market? h.What is the quantity of the shortage or surplus? i.How many bushels will be sold if the market price is $21 per bushel? j.If the market price is $21 per bushel, what must happen to restore equilibrium in the market? _ _

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Question 2

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a.Equilibrium price = $15; Equilibrium quantity = 15 000 bushels.
b.There is a shortage.
c.Shortage = 22 000 - 9000 = 13 000 bushels.
d.Quantity sold = 9000 bushels.
e.Price must rise.
f.At $9 per bushel.
g.There is a surplus.
h.Surplus = 28 000 - 8000 = 20 000 bushels.
i.Quantity sold = 8000 bushels.
j.Price must fall.

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all. a.An increase in the number of firms in the market b.An increase in the current price of the product c.A decrease in productivity d.An increase in the expected future price of a product e.A decrease in the price of an input _ _

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Question 3

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a.Shift to the right
b.No shift
c.Shift to the left
d.Shift to the left
e.Shift to the right

Assume that both the demand curve and the supply curve for MP3 players shift to the right, but the demand curve shifts more than the supply curve.As a result,

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Question 4

Figure 3.5 -Refer to Figure 3.5.At a price of $15,

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Question 5

If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease.

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Question 6

Draw a demand curve and label it D₁.On the graph, illustrate an increase in demand and a decrease in demand, and label the curves D₂ and D₃, respectively.Starting on demand curve D₁, explain the shift that would result from each of the following events: a.an increase in income and the good is a normal good b.an increase in income and the good is an inferior good c.a decrease in the price of a substitute good d.a decrease in the price of a complementary good e.an increase in the taste for the good f.a decrease in population g.an increase in the expected future price of the good _ _

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Question 7

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B). Which of the following changes would cause the equilibrium to change to point C?

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Question 8

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles? _ _

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Question 9

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point E). Which of the following changes would cause the equilibrium to change to point A?

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Question 10

Last year, the Pottery Palace supplied 8000 ceramic pots at $40 each.This year, the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence, The Pottery Palace has experienced________.

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Question 11

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in:

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Question 12

What results when a demand curve shifts to the left?

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Question 13

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

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Question 14

Elle decreased her consumption of bananas when the price of peanut butter increased.For Elle, peanut butter and bananas are:

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Question 15

Which of the following would cause a decrease in the supply of milk?

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Question 16

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

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Question 17

Figure 3.2 -Refer to Figure 3.2.Which movement represents increase in the number of firms in the market?

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Question 18

A change in which variable will change the market demand for a product?

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Question 19

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

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Question 20

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:

Assume that both the demand curve and the supply curve for MP3 players shift to the right, but the demand curve shifts more than the supply curve.As a result,

Figure 3.5 -Refer to Figure 3.5.At a price of $15,

If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease.

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B). Which of the following changes would cause the equilibrium to change to point C?

From a supply perspective, what impact would an increase in the price of motorcycles have on the market for motorcycles? _ _

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point E). Which of the following changes would cause the equilibrium to change to point A?

Last year, the Pottery Palace supplied 8000 ceramic pots at $40 each.This year, the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence, The Pottery Palace has experienced________.

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in:

What results when a demand curve shifts to the left?

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

Elle decreased her consumption of bananas when the price of peanut butter increased.For Elle, peanut butter and bananas are:

Which of the following would cause a decrease in the supply of milk?

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

Figure 3.2 -Refer to Figure 3.2.Which movement represents increase in the number of firms in the market?

A change in which variable will change the market demand for a product?

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

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

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in:

Assume that both the demand curve and the supply curve for MP3 players shift to the right, but the demand curve shifts more than the supply curve.As a result,

Figure 3.5 -Refer to Figure 3.5.At a price of $15,

If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease.

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S2 (point B). Which of the following changes would cause the equilibrium to change to point C?

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point E). Which of the following changes would cause the equilibrium to change to point A?

Last year, the Pottery Palace supplied 8000 ceramic pots at $40 each.This year, the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence, The Pottery Palace has experienced________.

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in:

What results when a demand curve shifts to the left?

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.

Elle decreased her consumption of bananas when the price of peanut butter increased.For Elle, peanut butter and bananas are:

Which of the following would cause a decrease in the supply of milk?

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

Figure 3.2 -Refer to Figure 3.2.Which movement represents increase in the number of firms in the market?

A change in which variable will change the market demand for a product?

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B). Which of the following changes would cause the equilibrium to change to point C?

Figure 3.8 -Refer to Figure 3.8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point E). Which of the following changes would cause the equilibrium to change to point A?