CH. 4 The Market Forces of Supply and Demand

Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?

B

When drawing a demand curve,

price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

If Alpine Springs and Dew Good are the only two suppliers in this market, by how much does the market quantity supplied change with each $3 increase in price?

200 Cases

Which combination would produce a decrease in equilibrium price and an indeterminate change in equilibrium quantity?

B. C

Which of the four panels represents the market for pizza delivery in a college town as we go from summer to the beginning of the fall semester?

Panel (a)

Which of the four panels illustrates a decrease in quantity demanded?

Panel (d)

Which of the following movements would illustrate the effect in the market for fences of a decrease in the price of wood?

Point A to Point B

Which of the four panels illustrates an increase in quantity supplied?

Panel (a)

New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?

Price will fall

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Price will rise, and the effect on quantity is ambiguous

If the economy goes into a recession and incomes fall, what happens in the markets for inferior goods?

Prices and quantities both rise.

Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

Quantity will rise, and the effect on price is ambiguous

All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from

SB to SA

Movie tickets and DVDs are substitutes. If the price of DVDs increases, what happens in the market for movie tickets?

The demand curve shifts to the right.

If the four suppliers listed are the only suppliers in this market and the market quantity demanded is 500 cases when the price is $5.00, which of the following statements is correct?

The market is in equilibrium at a price of $5.00.

Suppose the figure shows the market demand for Big Box e-readers. Suppose the price of the leading competitor's e-readers, a substitute good, decreases. Which of the following changes would occur?

a shift from D1 to D2

Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?

an announcement by the FDA that oranges prevent heart disease

Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold?

an increase in the price of grapes, an input to jelly

Equilibrium quantity must decrease when demand

decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease

Equilibrium price must decrease when demand

decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously.

Which of the following events must cause equilibrium price to fall?

demand decreases and supply increases

It is apparent from the figure that the

demand for the good conforms to the law of demand.

Equilibrium price must increase when demand

increases and supply does not change, when demand does not change and supply decreases, and when demand increases and supply decreases simultaneously.

Equilibrium quantity must increase when demand

increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase

An increase in quantity demanded

results in a movement downward and to the right along a demand curve.

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

supply, lower

An increase in ________ will cause a movement along a given demand curve, which is called a change in ________.

supply, quantity demanded

If the price were $8, a

surplus of 25 units would exist, and price would tend to fall

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

the equilibrium price but not above or below the equilibrium price

A change in which of the following will NOT shift the demand curve for hamburgers?

the price of hamburgers