Exam 2: Demand and Supply: an Introduction

The following figure shows the market for grapefruit (in kilos): -Refer to the diagram above to answer this question.If the price of oranges (a substitute)were to decrease,causing the demand for grapefruit to change by 12 kilos,what will be the new equilibrium price and quantity?

The product is a normal product. -Refer to the graph above to answer this question.What does the distance Q1 to Q2 represent?

What is the term for the effect which a price change has on real income and therefore on the quantity demanded of a product?

What is the effect of consumers' expecting that the future price of a product will increase?

Which of the following pairs of products are substitutes?

What will cause the supply of a product to decrease?

Explain the difference between a normal product and an inferior product.

-Refer to Figure 2.15 to answer this question.Assume that there is a shortage of 60 units.What does this mean?

The following table shows the demand and supply of bottles of premium olive oil for Country ABC. a)What are values of equilibrium price and quantity? b)Suppose the price of premium olive oil is $6 per bottle,would there be a shortage or surplus? How much?

All of the following,except one,is demand.Which is the exception?

All else held constant,an increase in supply will lead to a

-Refer to the above graph to answer this question.What is the minimum price the quantity sold at a price of $14 could have been sold for?

Explain how a shortage will be eliminated.

What is meant by the term change in the quantity demanded?

-Refer to the graph above to answer this question.Which of the following statement is correct?

What is true of complementary products?

Explain how a market adjusts to an increase in the supply of a product.

What is the effect of an increase in the price of a product?

What is the effect of a decrease in business taxes?

-Refer to the above graph to answer this question.How could you describe the movement from point D to point A?