Exam 4: The Market Forces of Supply and Demand

Suppose that the incomes of buyers in a particular market for a normal good increase and there is also an increase in input prices.What would we expect to occur in this market?

Figure 4-6 -Refer to the Figure 4-6.What could cause the shift from D to D1?

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Market demand is given as QD = 40 - 2P.Market supply is given as QS = 2P.If price increases from $14 to $18,what is the price elasticity of demand?

If the price of a substitute to good X increases,what will happen?

Market demand is given as QD = 60 - P.Market supply is given as QS = 3P.If price increases from $35 to $40,what is the price elasticity of demand?

What is another term for equilibrium price?

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises,the price of steel rises,public transportation becomes cheaper and more comfortable,and auto workers negotiate higher wages?

What is the downward-sloping line that relates prices and quantity demanded?

Market demand is given as QD = 40 - 2P.Market supply is given as QS = 2P.If price increases from $3 to $5,what is the price elasticity of demand?

A dress manufacturer is expecting higher prices for dresses in the near future.What would we expect?

For a seller,which of the following is NOT positively related?

Kingston is a small university city in Ontario.What happens to the market demand curve for fast food in Kingston at the end of August each year?

Consider the following scenario: a new manufacturing process is introduced to make hockey skates.The new process is more efficient,lowers the cost of producing hockey skates,and allows more firms start producing hockey skates.At the same time,more individuals prefer hockey as a leisure activity and hockey league registration fees have gone down.What will happen to the equilibrium price and quantity?

What will happen to the equilibrium price of new textbooks if more students attend university,paper becomes cheaper,textbook authors accept lower royalties,and fewer used textbooks are sold?

Ad Venture is a company that produces advertising video clips.Their supply curve is Qs=-2W+6P,where W (in 10s)is the hourly wage that the company pays their workers and P (in 1000s)is the ongoing market price for a 1-minute commercial. a)If the current wage in the video industry is $35 (W=3.5),what is the minimum price that allows Ad Venture to remain in the industry (i.e.,to supply a positive number of videos)? Draw the supply curve. b)If the wage is $35,how much should the market price be so that Ad Venture produces 8 videos? c)At the price you have determined at point b.,how does the number of videos supplied change if the wage decreases to $30? Show this situation in your graph.

Fill in the accompanying table,showing whether equilibrium price and equilibrium quantity go up,down,or stay the same.

What happens in a market economy?

Suppose that scientists find evidence that proves tattoos improve the body's immune system.What would we expect to see?

How is a market supply curve constructed?