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Exam 4: The Market Forces of Supply and Demand

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Question 21

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When the price of a good is high, selling the good is profitable, and so the quantity supplied is large.

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Question 22

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Figure 4-8 -Refer to Figure 4-8. All else equal, an increase in the income of buyers who consider turkey to be an inferior good would cause a move from

A) D_a to D_b.
B) D_b to D_a.
C) x to y.
D) y to x.

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Question 23

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When the market price is below the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

An increase in supply will cause a decrease in price, which will cause an increase in demand.

Figure 4-1 ​ -Refer to Figure 4-1. It is apparent from the figure that the

A likely example of complementary goods for most people would be

The demand curve is the upward-sloping line relating price and quantity demanded.

Which of the following is not held constant in a demand schedule?

An increase in demand shifts the demand curve to the left.

Table 4-2 ​ ​ ​ ​ -Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity demanded at a price of $1.50 is

Table 4-9 The following table shows the supply and demand schedules in a market. $\begin{array} { | l | l | l | } \hline \text { Price (\$) } & \begin{array} { l } \text { Quantity } \\\text { Demanded } \\\text { (units) }\end{array} & \begin{array} { l } \text { Quantity } \\\text { Supplied } \\\text { (units) }\end{array} \\\hline 0 & 50 & 0 \\\hline 2 & 40 & 15 \\\hline 4 & 30 & 30 \\\hline 6 & 20 & 45 \\\hline 8 & 10 & 60 \\\hline 10 & 0 & 75 \\\hline\end{array}$ -Refer to Table 4-9. At a price of $8, how large of a surplus will there be in this market?

All goods and services are sold in perfectly competitive markets.

Individual supply curves are summed vertically to obtain the market supply curve.

A movement upward and to the left along a given demand curve is called a decrease in demand.

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

A decrease in the price of baseball bats will decrease the demand for baseballs.

A likely example of substitute goods for most people would be

Which of the following would not increase in response to a decrease in the price of ironing boards?

Figure 4-13 ​ -If corn is an input into the production of ethanol, will a decrease in the price of corn increase the supply of ethanol or decrease the supply of ethanol?