Exam 3: Supply and Demand

Use the following to answer questions : Figure: Shifts in Demand and Supply IV -(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose half of the people in San Diego pack up and move to Colorado Springs. Which panel BEST describes how this will affect the supply of houses in San Diego?

In the local market for coffee, a normal good, the price will _____ and the quantity will _____ if new coffee shops open and consumers' incomes decrease because of a recession.

Suppose you manage a corner grocery store. If peanut butter is an inferior good, what do you suppose would happen to the price and quantity sold of peanut butter as incomes fell during a recession?

It is certain that the equilibrium quantity will rise when:

If the price of a commodity increases, you can expect the:

A decrease in supply is caused by:

If tortilla chips are a normal good, when there is an increase in income, equilibrium price _____ and equilibrium quantity _____.

Suppose the local real estate market is in equilibrium. A recession causes local household incomes to decline. At the same time, construction of a large subdivision of new homes has just been completed. Given these two changes and assuming that real estate is a normal good, we can predict that the price of real estate will _____ and the quantity of real estate bought and sold will _____.

Use the following to answer questions : -(Table: The Market for Chocolate-Covered Peanuts) Look at the table The Market for Chocolate-Covered Peanuts. If the price of chocolate-covered peanuts is $0.60, the price will:

A major input into vanilla ice cream is cream. An increase in the price of cream will reduce the quantity of vanilla ice cream supplied, but it will not reduce the supply of vanilla ice cream.

Assume that corn is an input in the production of beef but not in the production of pork. Further, beef and pork are substitutes in consumption. A decrease in the price of corn will _____ the supply of beef and _____ the demand for pork.

Use the following to answer questions: Figure: Demand and Supply of Gasoline -(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. A factor that may have changed supply from S₁ to S₂ is:

A new wonder diet that results in a dramatic weight loss sweeps through the United States. The key to the diet is to eat unlimited amounts of red meat (beef) but no poultry or carbohydrate-rich foods. As millions of Americans switch to the new diet, we can expect a(n) _____ in the _____ beef, leading to a shift to the _____ in the _____ curve for beef and _____ beef prices.

Use the following to answer questions : Figure: Shifts in Demand and Supply III -(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating asparagus slows the aging process. Which panel BEST describes how this will affect the market for asparagus?

When milk prices increased in 2008, one milk consumer stated that the reason he cut down on milk consumption was so that he could drive his car. This action represents a:

If the economy booms and peoples' incomes rise, then the demand curve for a normal good like new houses will _____ and the equilibrium quantity of new houses produced will _____.

Which of the following illustrates the law of demand?

Use the following to answer questions: Figure: Shifts in Demand and Supply -(Figure: Shifts in Demand and Supply) Look at the figure Shifts in Demand and Supply. The figure shows how supply and demand might shift in response to specific events. Suppose consumer incomes increase. Which panel BEST describes how this will affect the market for used furniture, an inferior good?

Use the following to answer questions : Figure: Shifts in Demand and Supply III -(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose consumer incomes increase. Which panel BEST describes how this will affect the market for designer boots, a normal good?

Excess supply occurs when: