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Exam 4: Demand, Supply, and Markets

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Question 91

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What is the income effect of an increase in the price of backpacks (a normal good) ?  

A)  a decrease in the demand for backpacks 
B)  a decrease in the quantity demanded of backpacks 
C)  an increase in the demand for backpacks 
D)  an increase in the quantity demanded of backpacks

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Question 92

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Suppose there are only two goods, apples and oranges.What, if anything, will happen if the price of each good increases by 15 percent?  

A)  The consumer will substitute apples for oranges. 
B)  The consumer will substitute oranges for apples. 
C)  There is no substitution effect because relative prices have remained constant. 
D)  The consumer will substitute apples for pears

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Question 93

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Which of the following would NOT shift the demand curve for pork?  

Which of the following would cause an increase in the supply of wheat?  

What does an increase in the price of a good normally also increase?  

Exhibit 4-6 $\begin{array} { r c c } \hline \text { Price } & \begin{array} { c } \text { Quantity } \\\text { demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { supplied }\end{array} \\\hline \$ 1.00 & 100 & 10 \\1.20 & 90 & 30 \\1.40 & 80 & 50 \\1.50 & 70 & 70 \\1.60 & 60 & 90 \\\hline\end{array}$ -Refer to the exhibit.Suppose the price of the good is $1.40.Is there a shortage or a surplus, and by what amount?  

Which of the following will cause the demand curve for a good to shift to the left?  

Which statement corresponds to the characteristics of a demand curve?  

Suppose that the incomes of buyers in a particular market for a normal good increases, and suppose there is also a reduction in input prices.What would be expected to occur in this market?  

Exhibit 4-8 -Refer to the exhibit.Suppose the market demand curve is given by D₁ and the supply by S₁, and suppose equilibrium price is P2 and equilibrium quantity is Q₁.If there is an increase in the birth rate, what will the new equilibrium price and equilibrium quantity be?  

What trend demonstrates that two goods are substitutes?  

What does the law of demand state about the relationship between price and quantity?  

What change does the demand curve undergo when demand for a good decreases?  

Exhibit 4-13 -Refer to the exhibit.Which of the following best describes what happens at the price ceiling, P?  

Which pair is the best example of complements?  

Exhibit 4-8 -Refer to the exhibit 4-8.Suppose the market demand for baby formula is given by demand curve D2, and the supply is given by supply curve S2.What is the market equilibrium?  

In a competitive market what happens to the price when the supply curve shifts right?  

What will an increase in demand cause?  

What do most economists believe about tastes and preferences of consumers?  

Exhibit 4-9 -Refer to the exhibit.Which of the following would cause a shift of demand from D' to D?