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Exam 3: Where Prices Come From: the Interaction of Demand and Supply

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Question 61

Multiple Choice

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Figure 3-4 -Refer to Figure 3-4. At a price of $25, how many units will be supplied?

A) 400
B) 500
C) 600
D) 800

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Question 62

Multiple Choice

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Figure 3-7 -Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

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Question 63

True/False

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If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

"Because chips and salsa are complements, an increase in the price of chips will cause the demand for salsa to decrease. This initial shift in demand for chips results in a higher price for chips; this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement?

Indicate whether each of the following situations would shift the supply curve to the left, to the right, or not at all. a. An increase in the price of an input b. An increase in productivity c. An increase in the price of a substitute in production d. A decrease in the expected future price of a product e. A decrease in the current price of the product

Consider the collectors' market for first editions of two popular children's books, Harry Potter and the Order of the Phoenix by J. K. Rowling and Ruby in the Smoke by Philip Pullman. Sales of the Harry Potter novel are much greater than sales of Ruby in the Smoke yet the price of the Harry Potter novel is much lower than the price of Pullman's novel. a. On one large diagram, draw a demand and supply graph for first editions of Harry Potter and the Order of the Phoenix and another demand and supply graph for first editions of Ruby in the Smoke. b. Show how it is possible for the price of the Harry Potter novel to be much lower than the price of Pullman's novel, even though the demand for the Harry Potter novel is much greater than the demand for Ruby in the Smoke. c. Provide a written explanation to accompany your graphical illustration.

Suppose that when the price of oranges decreases, Sarita decreases her purchases of peaches. To Sarita,

Figure 3-1 -Refer to Figure 3-1. A decrease population would be represented by a movement from

In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant?

In recent years, the consumption of orange juice in the United States has fallen but the price of orange juice has risen. This is because the supply of orange juice has ________ and the demand for orange juice has ________.

A change in all of the following variables will change the market demand for a product except

What is the difference between a demand schedule and a demand curve?

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets. To the Landry family

In 2004, hurricanes destroyed a large portion of Florida's grapefruit crop. How did this affect the market price and market quantity of grapefruit?

Table 3-2 -Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. At a price of $75, the quantity demanded in the market would be

If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in

Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza,

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?

In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit in 2004