Exam 4: The Market Forces of Supply and Demand

Figure 4-22 -Refer to Figure 4-22. At a price of $24, there is a

Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and equilibrium quantity would change. a. Winter starts, and the weather turns sharply colder. b. The price of tea, a substitute for hot chocolate, falls. c. The price of cocoa beans decreases. d. The price of whipped cream falls. e. A better method of harvesting cocoa beans is introduced. f. The Surgeon General of the U.S. announces that hot chocolate cures acne. g. Protesting farmers dump millions of gallons of milk, causing the price of milk to rise. h. Consumer income falls because of a recession, and hot chocolate is considered a normal good. i. Producers expect the price of hot chocolate to increase next month. j. Currently, the price of hot chocolate is $0.50 per cup above equilibrium.

The following table contains a demand schedule for a good. If the law of demand applies to this good, then Q1 could be

When a supply curve or a demand curve shifts, the equilibrium price and equilibrium quantity change.

Table 4-1 -Refer to Table 4-1. If the market consists of Michelle and Hillary only and the price falls by $1, the quantity demanded in the market increases by

Suppose the number of buyers in a market decreases. As a result, would the demand curve in this market shift to the right or to the left?

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

If a good or service has only one seller, then the seller is called a monopoly.

Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Which curves) shifts) and in which direction?

Table 4-11 -Refer to Table 4-11. The equilibrium price and quantity, respectively, are

Table 4-7 -Refer to Table 4-7. If these are the only four sellers in the market for ice cream, then when the price increases from $4 to $6, the market quantity supplied

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

A movement upward and to the left along a given demand curve is called a decrease in demand.

When it comes to people's tastes, economists generally believe that

Table 4-4 -Refer to Table 4-4. Suppose the market consists of Barb and Carl only. If the price falls by $2, the quantity demanded in the market increases by

Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to

If the supply of a product increases, then we would expect equilibrium price

The equilibrium price is the same as the market-clearing price.

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Figure 4-2 -Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $10, then the market quantity demanded is