ECON 201 - Quiz 3: Check Your Understanding
Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve. A sharp rise in the price of gasoline leads many commuters to join carpools in order to reduce their gasoline purchases.
a movement along the demand curve.
Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve. When Circus Cruise Lines offered reduced prices for summer cruises in the Caribbean, their number of bookings increased sharply.
a movement along the demand curve.
Explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve. More homeowners put their houses up for sale during a real estate boom that causes house prices to rise.
a movement along the supply
Explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve. Many construction workers temporarily move to areas that have suffered hurricane damage, lured by higher wages.
a movement along the supply curve.
Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve. A store owner finds that customers are willing to pay more for umbrellas on rainy days.
a shift of the demand curve
Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve. People buy more long-stem roses the week of Valentine's Day, even though the prices are higher than at other times during the year.
a shift of the demand curve
Explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve. Many strawberry farmers open temporary roadside stands during harvest season, even though prices are usually low at that time.
a shift of the supply curve
Explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve. Since new technologies have made it possible to build larger cruise ships (which are cheaper to run per passenger), Caribbean cruise lines offer more cabins, at lower prices, than before.
a shift of the supply curve
explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve. Immediately after the school year begins, fast-food chains must raise wages, which represent the price of labor, to attract workers.
a shift of the supply curve
In the following situation, the market is initially in equilibrium. Explain the change in either supply or demand that result from the event. After the event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? After a heavy snowfall, many people want to buy second-hand snowblowers at the local tool shop.
The demand curve for second-hand snowblowers shifts rightward. At the original equilibrium price, the quantity of second-hand snowblowers demanded exceeds the quantity supplied. This is a case of shortage. The equilibrium price of second-hand snowblowers will rise.
In the following situation, the market is initially in equilibrium. Explain the change in either supply or demand that result from the event. After the event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? After a hurricane, Florida hoteliers often find that many people cancel their upcoming vacations, leaving them with empty hotel rooms.
The demand curve shifts leftward. At the original equilibrium price, the quantity of hotel rooms supplied exceeds the quantity demanded. This is a case of surplus. The rates for hotel rooms will fall.
In the following situation, the market is initially in equilibrium. Explain the change in either supply or demand that result from the event. After the event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? As technological innovation has lowered the cost of recycling used paper, fresh paper made from recycled stock is used more frequently.
The market for fresh paper made from recycled stock: this is a rightward shift in supply due to a technological innovation. As a result of this shift, the equilibrium price of fresh paper made from recycled stock will fall and the equilibrium quantity bought and sold will rise.
In the of the following example, determine (i) the market in question; (ii) whether a shift in demand or supply occurred, the direction of the shift, and what induced the shift; and (iii) the effect of the shift on the equilibrium price and the equilibrium quantity. As the price of gasoline fell in the United States during the 1990s, more people bought large cars.
The market for large cars: this is a rightward shift in demand caused by a decrease in the price of a complement, gasoline. As a result of the shift, the equilibrium price of large cars will rise and the equilibrium quantity of large cars bought and sold will also rise.
In the following situation, the market is initially in equilibrium. Explain the change in either supply or demand that result from the event. After the event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? When a local cable company offers cheaper on-demand films, local movie theaters have more unfilled seats.
The market for movies at a local movie theater: this is a leftward shift in demand caused by a fall in the price of a substitute, on-demand films. As a result of this shift, the equilibrium price of movie tickets will fall and the equilibrium number of people who go to the movies will also fall.
In the following situation, the market is initially in equilibrium. Explain the change in either supply or demand that result from the event. After the event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? 2013 was a very good year for California wine-grape growers, who produced a bumper crop.
The supply curve shifts rightward. At the original equilibrium price of the year before, the quantity of grapes supplied exceeds the quantity demanded. This is a case of surplus. The price of grapes will fall.
In the following situation, the market is initially in equilibrium. Explain the change in either supply or demand that result from the event. After the event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result? 2013 was a very good year for California wine-grape growers, who produced a bumper crop.
The supply curve shifts rightward. At the original equilibrium price of the year before, the quantity of grapes supplied exceeds the quantity demanded. This is a case of surplus. The price of grapes will fall.
Higher spending on pets means fewer veterinarians are available to tend to farm animals.
True
The competitive market model determines the price you pay for concert tickets.
True
