Exam 4: The Market Forces of Supply and Demand

In a market economy,

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Assume Leo buys coffee beans in a competitive market. It follows that

Figure 4-1 -Refer to Figure 4-1. It is apparent from the figure that the

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

Figure 4-6 -Refer to Figure 4-6. Suppose that the federal government is concerned about obesity in the United States. Congress is considering two plans. One would require "junk food" producers to include warning labels on all junk food. The other would impose a tax on all products considered to be junk food. If the warning labels are successful, we could illustrate the plan as producing a movement from

In a given market, how are the equilibrium price and the market-clearing price related?

Scenario 4-1 Suppose the demand schedule in a market can be represented by the equation , where is the quantity demanded and is the price. Also, suppose the supply schedule can be represented by the equation , where is the quantity supplied. -Refer to Scenario 4-1. What is the equilibrium quantity in this market?

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause an)

Table 4-13 The demand schedule below pertains to sandwiches demanded per week. -Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $3.00. • The market quantity supplied of sandwiches is 4. • The slope of the supply curve is 2. Then there is currently a

Table 4-10 The following table shows the number of cases of water each seller is willing to sell at the prices listed. -Refer to Table 4-10. If the four suppliers listed are the only suppliers in this market and the market demand schedule is: the equilibrium price and quantity are

When supply and demand both increase, equilibrium

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

If a higher price means a greater quantity supplied, then the supply curve slopes upward.

For a competitive market,

If macaroni and cheese is an inferior good, then an increase in

Table 4-13 The demand schedule below pertains to sandwiches demanded per week. -Refer to Table 4-13. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the following: • x = 2. • The current price of a sandwich is $3.00. • The market quantity supplied of sandwiches is 5. • The slope of the supply curve is 1. Then there is currently a

Table 4-3 -Refer to Table 4-3. If these are the only four buyers in the market, then the market quantity demanded at a price of $2 is