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Exam 3: Supply and Demand

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Question 1

Multiple Choice

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

A) decreases;increases.
B) decreases;decreases.
C) increases;increases.
D) increases;decreases.

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Question 2

Multiple Choice

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Use the following to answer question: -(Figure: Four Markets for Online Movie Rentals) Use Figure: Four Markets for Online Movie Rentals.Which of the graphs shows what may happen in the market for online movie rentals if D₁ or S₁ is the original curve and D₂ or S₂ is the new curve and if the cost of buying content for online movie distributors like Apple (i.e. ,the price that Apple pays for the online content to sell to consumers) decreases?

A) A
B) B
C) C
D) D

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Question 3

Multiple Choice

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Which factor will NOT cause an increase in demand for good X?

Which factor would cause a DECREASE in the supply of a good?

Use the following to answer question: -(Figure: Supply,Demand,and Equilibrium)Use Figure: Supply,Demand,and Equilibrium.In the figure,there will be an excess supply of the good at a price of P1.

The market for corn in Kansas is considered to be competitive.This means there are _____ buyers and _____ sellers of corn in Kansas.

Use the following to answer question: -(Table: Supply of Lemonade) Use Table: Supply of Lemonade.If the price of lemonade is $1 per cup,the total quantity of lemonade supplied will be _____ cups per day.

Use the following to answer question: -(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II.The figure shows how supply and demand might shift in response to specific events.Suppose the birthrate decreases.Which panel BEST describes how this will affect the market for diapers?

If suppliers expect prices for their product to rise next year,then one would expect a:

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

Use the following to answer question: -(Figure: The Demand and Supply of Wheat) Use Figure: The Demand and Supply of Wheat.What is the equilibrium quantity in this wheat market each period?

Milk is an important ingredient in the production of ice cream.If the price of milk increases,then one would expect,holding all other things constant:

A negative relationship between quantity demanded and price is called the law of:

Use the following to answer question: -(Figure: The Demand and Supply of Wheat) Use Figure: The Demand and Supply of Wheat.A temporary price of $2 in this market would result in a _____ of _____ bushels per period.

If the quantity of housing supplied in a community is greater than the quantity of houses demanded,the existing price:

If Benjamin considers sushi to be a normal good and if his income increases by 20%,his purchases of sushi will:

If demand is downward sloping,an increase in supply with no change in demand will lead to a(n) _____ in equilibrium quantity and a(n) _____ in equilibrium price.

Customers used to pay inside before pumping gas.When gas stations introduced paying at the pump,thus decreasing production costs,there was a shift to the _____ in the _____ curve and gas prices _____.

The market for milk is initially in equilibrium.Milk producers successfully advertise to encourage milk drinking.At the same time,more milk producers enter the market.Standard demand and supply analysis tells us that the:

Use the following to answer question: -(Figure: Shifts in Demand and Supply II) Use Figure: Shifts in Demand and Supply II.The graph shows how supply and demand might shift in response to specific events.Suppose a fall frost destroys one-third of the nation's grapefruit crop.Which panel BEST describes how this will affect the market for vitamin B₁₂ tablets,which are a substitute in consumption for grapefruit?