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Exam 4: Demand, Supply, and Equilibrium

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Question 51

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Two goods are said to be complements when a fall in the price of one good ________.

A) leads to a fall in the price of the other good
B) does not affect the demand for the other good
C) leads to a leftward shift in the demand for the other good
D) leads to a rightward shift in the demand for the other good

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Question 52

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Which of the following is the best example of the Law of Supply?

A) When the cost of production of cotton fell, the market price of cotton also fell.
B) When the market price of pens increased, sellers started supplying more pens.
C) When the market price of pens increased, sellers started supplying fewer pens.
D) When the cost of production of cotton increased, all suppliers' willingness to accept decreased.

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Question 53

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Explain the role of prices in a market.

Which of the following statements correctly describes a competitive market?

Jenny likes chocolates.One day,a friend offers her a chocolate bar and she is extremely happy on receiving it.As the day progresses,many other people also buy her chocolate.As she gets more and more chocolates,her excitement on receiving each bar is seen to gradually lessen.Which economic principle is reflected in this example?

The Law of Supply states that ________.

Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertical nor horizontal) .If the consumers' willingness to pay for the hundredth unit is $9.00 and the seller's willingness to accept for the hundredth unit $9.00,then the ________.

During the Battle of the Bulge in December 1944,American soldiers near Bastogne,Belgium,offered as much as $73 for a can of Campbell's soup that sold for $0.13 in U.S.grocery stores ($73 was nearly an entire month's pay for an army sergeant at that time) .These large amounts of money offered for soup represent a(n) ________.

Suppose Z is a normal good.The equilibrium price and quantity of Z in the year 2013 was $25 and 60 units,respectively.In 2017,the equilibrium price of Z had increased to $35 but the equilibrium quantity had decreased to 50 units.Other things remaining the same,which of the following could explain this change?

Scenario: Suppose Major League Baseball (MLB) is considering expansion to a U.S. city that currently does not have a MLB franchise. The league has compiled the following information on five cities viewed as the top contenders for an expansion franchise: MLB decides Charlotte is the most attractive candidate to receive an expansion franchise and is contemplating how demographic and economic information is likely to affect demand to attend MLB games in Charlotte. -Refer to the scenario above.MLB forecasted that parking for MLB games in Charlotte would cost $12,but it now learns that parking will actually cost $16.How will the increased price of parking affect demand for MLB game attendance in Charlotte?

The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S₁ is the initial supply curve. -Refer to the figure above.If the supply curve for flash drives shifts from S₁ to S₂,with no change in the demand curve,the new competitive equilibrium quantity is ________ units.

The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market. -Refer to the table above.If the market price of wine is $4 per bottle,and the market demand for wine is 65 bottles,Sandra's demand for wine is ________.

Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertical nor horizontal) .If the consumers' willingness to pay for the hundredth unit is $7.00 and the seller's willingness to accept for the hundredth unit is $10.00,then the equilibrium ________.

Scenario: Suppose that the government imposes a price control on gasoline where the legal price is set at $1.50 per gallon while the equilibrium price would be $2.25. A shortage ensues. Worried that you may not have enough gas to commute to school and do errands, you get up before dawn to go to a gas station to fill up the tank. But you find yourself waiting in a long line. Fortunately, the station did not run out of gas before your turn came up, and you were happy to drive away with a full tank. -Refer to the scenario above.Your total cost of getting gas ________.

-Refer to the table above.The Iowa soybean producer with the lowest willingness to accept is the ________.

Suppose the market for cement is such that the output of all sellers is identical in composition and quality.While there are a large number of buyers and sellers,everyone conducts transactions at a common market price.Which of the following statements is true about the structure of the cement market?

Which statement is consistent with the study reported in the Evidence-Based Economics element in this chapter?

Which of the following pairs of goods is likely to be considered substitutes?

The table below provides data on opium sales and farmgate prices of opium in Afghanistan from 1994 to 2008. -Refer to the table above.From 2000 to 2001,opium sales fell by 95 percent and opium prices increased by 975 percent.If you are told that demand curve for opium in Afghanistan remained constant from 2000 to 2001,what was the likely change in opium supply?

Differentiate between a change in demand and a change in quantity demanded.