Econ practice problems

Demand for apples goes down, causing the price to fall. This event would cause...

A movement along the supply curve. When demand decreases and prices fall, there is a movement along the supply curve.

Economic forecasts suggest that the demand for cell phones will increase in the future. What is the effect on supply on what is the factor that affects it?

Decrease, expectations; if demand for cell phones is expected to increase in the future, as suppliers will withhold inventory waiting for prices to increase.

You hear a rumor that a new and improved model of the phone you want is coming out next year. Name the factor that affects demand and if demand will increase or decrease.

Expectations, decrease; Your current demand will decrease in the present as you postpone purchasing under the expectation that a new model will be released next year.

The market for cell phones reaches equilibrium because cell phone sellers have an incentive:

For prices to rise and some cell phone consumers will not buy at higher prices, driving the price to equilibrium. Because their incentives are not aligned, each side will create opposing pressure on market prices.

Suppose an economic boom drives up wages for the sales representatives who work for cell phone companies. This will cause the:

Supply of cell phones to decrease. If an increase in wages causes an increase in production costs for sellers of cell phones, supply of cell phones will decrease. A decrease in supply would cause prices to rise and the number of cell phones traded to decrease.