APPLY Demand and Supply Digital Interactive HW (w/o DI)

Consider the market for​ gasoline, illustrated in the figure to the right. The equilibrium quantity of gasoline is _________ million gallons ​(enter a numeric response using a real number rounded to two decimal​ places) and the equilibrium price is ​$_________ per gallon. If instead the market price were ​$1.75, then there would be a __________ of __________ million gallons.

15; 2.50; shortage; 9

According to the law of​ supply, A. there is a positive relationship between price and quantity supplied. B. as the price of a product​ increases, firms will supply less of it to the market. C. as the price of a product​ increases, firms will supply more of it to the market. D. A and C only

A and C only

Suppose the equilibrium price and equilibrium quantity of gold both increase. Which of the following would produce such a​ change?

The market demand curve for gold could have increased.

According to the law of demand, there is an inverse relationship between price and quantity demanded. That​ is, the demand curve for goods and services slopes downward.​ Why?

When the price of a good​ increases, consumers' purchasing power​ decreases, and they cannot buy as much of the good as they did prior to the price change.

Market price is determined by

both supply and demand.

On the diagram to the​ right, a movement from A to C represents a

change in demand.

On the diagram to the​ right, a movement from A to B represents a

change in quantity supplied.

Use the line drawing tool to show how this affects the MP3 market by adding either a new supply curve or a new demand curve. Carefully follow the instructions​ above, and only draw the required objects. As a result of the positive change in technology, the new equilibrium price will be __________, and the new equilibrium quantity will be __________. Suppose instead that the demand curve shifts to the right. ​ Then, relative to the initial market​ equilibrium, A. the new equilibrium price would be lower and the new equilibrium quantity would be lower. B. the new equilibrium price would be higher and the new equilibrium quantity would be lower. C. the new equilibrium price would be higher and the new equilibrium quantity would be higher. D. the new equilibrium price would be lower and the new equilibrium quantity would be higher.

lower; higher, C

The distinction between substitutes and complements is

substitute goods are used for the same purposes while complementary goods are used together.

Consider the market for LCD​ TVs, illustrated in the figure to the right. Use the point drawing tool to identify the market equilibrium. Properly label this point. Carefully follow the instructions​ above, and only draw the required objects. Suppose instead that the price of LCD TVs is ​$2000.00. This will result in a __________, which will place __________ pressure on the price.

surplus; downward