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Exam 4: Demand, Supply, and Markets

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Question 91

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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?  

A)  P2 and Q₁ 
B)  P₁ and Q₂ 
C)  P2 and Q₂ 
D)  P₄ and Q₃

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Question 92

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What will an increase in demand cause?  

A)  an increase in supply 
B)  a decrease in supply 
C)  a decrease in quantity supplied 
D)  an increase in quantity supplied

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Question 93

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

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

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?  

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

What trend demonstrates that two goods are substitutes?  

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

Which statement corresponds to the characteristics of a demand curve?  

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

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

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

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

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

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 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?  

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

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?