Exam 3: Supply and Demand: Theory

Exhibit 3-5 -Refer to Exhibit 3-5.In the market shown,if equilibrium was originally at point W and is now at point X,the new equilibrium price is __________ it was originally and the new equilibrium quantity is ____________ it was originally.

According to the law of demand,the higher the price of an assigned textbook,the _______________ the quantity demanded of assigned textbooks will be,ceteris paribus,and the ______________ likely students will seek out an alternative to the assigned textbook.

Jerry has $50,000 in his savings account and the average new car price is $23,000.Does Jerry have a demand for a new car?

Explain the difference between a change in demand and a change in quantity demanded.Be sure to specify what causes each to change and how they differ when graphed.

Which of the following statements is false?

Explain what it means to say that "the market" feeds Cleveland.Give an example using a specific food item to help support your answer.

If the maximum price a person is willing and able to pay for a good is $50,and consumers' surplus is $20,then it follows that the price the buyer paid for the good is

Economists state that the __________ utility a person receives from a unit of a good,the __________ the price he or she is willing to pay for it.

There is a technological improvement in the production of good X.As a result,the _____________ curve for good X will shift ____________ resulting in a(n)_____________ in the equilibrium price of X and a(n)____________ in the equilibrium quantity of X.

On a supply-and-demand diagram,consider a price for which the horizontal distance to the supply curve is shorter than the horizontal distance to the demand curve.There is a __________ at that price and the current price must be __________ the equilibrium price.

NOTES: New Exhibit 3-6 -Refer to Exhibit 3-6.If an increase in income causes the demand for good X to shift from D₁ to D₂,then good X is

On the basis of the law of demand,it is more likely that a person will lose his temper when the price of losing his temper is low than when it is high.

Which of the following statements is false?

Exhibit 3-10 -Which of the following pairs of goods would be most likely to be substitutes?

Which of the following statements best represents the law of supply?

As long as the maximum buying price of a good is less than the minimum selling price of that good,an exchange will occur.

In the supply-and-demand diagram of the market for peanut butter,the equilibrium point has moved down and to the right.What could have caused this?