2_Supply and Demand

Monposony

1 Buyer Many Sellers No Product Differentiation

Demand Detriments

Income Price of Related Goods Taste and Preference Expectations Number of Buyers

Monopoly

Many Buyers 1 Seller

Supply Detriments

Input Prices Technology Price of Substitute Goods Expectations Number of Sellers

Oligopoly

Many Buyers Few Sellers

Perfect Competetion

Many Buyers Many Sellers No Product Differentiation

Monopolistic Competition

Many Buyers Many Sellers Product Differentiation

If prices were below equilibrium price producers could raise prices without losing sales. T or F

True

Ketchup is a complement (as well as a condiment) for hot dogs. If the price of hot dogs rises, the quantity of hot dogs demanded________ , which____________the demand for ketchup. Because of the change in the equilibrium quantity of ketchup, the demand for tomatoes by ketchup producers___________ , causing the equilibrium price of tomatoes to__________ . This means producers of tomato juice face___________ input prices, and the supply of tomato juice_________ . The resulting_________in the price of tomato juice causes people to move away from substitute orange juice, so the demand for orange juice_____ .

decreases decreases decreases fall lower increases decrease decreases

Over the past 30 years, technological advances have reduced the cost of computer chips. This has led to an ______ in the supply of computers, causing the price of computers to_______ . Because computers and computer software are____________ , this change in price causes the demand for computer software to___________ . However, computers and typewriters are____________ , so the change in the price of computers_________ the demand for typewriters.

increase decrease complements increase substitutes decreased

The discovery of a large new reserve of crude oil will shift the ________ curve for gasoline, leading to a ________ equilibrium price.

supply , lower