Economics final CHAPTER FOUR

Good weather and heavy winter rain increases the supply of agricultural products. This means that at any given price, a higher quantity will be supplied. Conversely, a drought would shift the

supply curve to the left.

The price at which quantity demanded equals quantity supplied is ________ and the corresponding quantity is ________.

$14, 31

Decreased competition because of fewer producers in a market will cause

higher prices due to an decrease in the quantity supplied at every price.

At a price of $16, quantity demanded is ________, quantity supplied is ________; therefore excess ________ has occurred.

5, 35; supply

If price was $1.40 per gallon and increased to $2.00 per gallon, how does quantity of gasoline demanded change?

600 million gallons to 460 million gallons

What would cause the level of demand (meaning the relationship between price and quantity demanded) to shift?

Population grows in a particular market area.

Alice is analyzing the demand for American made moped market for the company Genuine. The main competition, BMW, increased their listing price by 20% recently. Arrows are used to indicate the direction of the demand curve shift in a graph. Which is the correct direction the arrows should be drawn to reflect the Genuine moped market and which line is the old demand and new demand curve?

The arrows should be drawn pointing rightwards. The curve on the right represents the new demand and the curve on the left old demand.

If the demand for home gaming system games has dramatically increased in the last month, what scenario is most likely to have happened?

The holidays and new years are around the corner.

According to this graph, what happens to quantity demanded if the price of a used car increases from $5000 to $7000?

The quantity demanded drops to 1,000 cars.

It is the end of the year and party supply stores have added the things needed for a fantastic New Years Eve party. According to the law of supply, what scenario would you expect to see with the party supply stores?

The supply of New Year's party supplies have increased since November.

In 1973 Arab countries imposed an oil embargo on the United States and other developed countries in the aftermath of the Yom Kippur war. At the same time improved infrastructure and increased income was altering consumer preferences in favor of automobiles over public transportation. If you were drawing a supply and demand graph to illustrate the change in the gasoline market in 1973-1974, what would you say has happened to the supply and demand curves and the equilibrium price and quantity during this time period?

The supply of gasoline will decrease shifting the curve to the left while the demand curve shifts to the right. As a result the equilibrium price will increase but it is impossible to pinpoint the equilibrium quantity change.

Frank has plotted the following points on a supply curve graph from the supply schedule for golf shoe market. Which of the following supply curves accurately reflects Frank's supply schedule? Both the x and y axis is quantity and price are in thousands. The three colored sloping lines are as follows: The orange line starts at 100,1 and ends at 350,7. The yellow line starts at 50,1 and ends at 195,7. The silver line starts at 100,1 and ends at 375, 7. Golf ShoesPrice ($)Quantity Supplied$551$752$1003$1204$1355$1556$1957

The yellow line.

Last year Hawaii did not received many rain storms and with eight months of little rain there was low demand for umbrellas. This year however, there have been three months of big rain storms and only a few weeks of sunny weather. If you were to draw a graph depicting the changing market for umbrellas from last year to this, how would the new equilibrium price and quantity demanded compare to last year's market?

With supply of umbrellas being constant, equilibrium price and quantity demanded increase for umbrellas compared to last year.

The law of demand states that as the price of a good decreases,

buyers desire to purchase more of it.

A supply curve is a graphical illustration of the relationship between quantity supplied and

price

Excess demand will result in suppliers ________ prices, which encourages consumers to buy ________ .

raising prices; less

When quantity demanded decreases in response to a change in price

there is a movement from one point to another along the demand curve.