econ chap 3

(Figure: Demand and Supply of Gasoline) Given the initial equilibrium of S1 and D, any price lower than ________ will create pressure for the price to ________.

$2.50; rise

(Figure: Demand for Coconuts) If fish is a substitute good for coconuts and the price of fish increases, then the movement that would take place in the model could be:

A to C.

The Kansas market for corn is considered a competitive market. This means there are ________ buyers and ________ sellers of corn in Kansas.

many and many

If the supply and demand curves intersect at a price of $47, then any price above that would result in a(n):

surplus.

A shift of the demand curve for Luis's Pizza would not be caused by a change in the:

price of Luis's Pizza.

A newspaper story recently reported that the price of new cars (a normal good) has decreased, and the quantity of new cars sold has dropped. The price and quantity changes were probably caused by:

a decrease in buyers' incomes.

(Figure: Demand and Supply of Gasoline) Given the equilibrium after a change in supply from S1 to S2:

at the old price of $2.50, there will be pressure for the price to fall.

Alice goes to the local supermarket to purchase one package of her favorite taco shells. She often pays $1.50 for a package, but she finds they are on sale for $1 each. According to the law of demand, one can expect Alice to:

purchase more than one package of taco shells.

(Figure: Demand for DVDs) A decrease in the price of movie tickets (a substitute) would result in a change illustrated by:

the move from f to g in panel A.

(Figure: Demand for DVDs) A decrease in the price of DVD players (a complement) would result in a change illustrated by:

the move from h to i in panel B.

(Figure: Demand for DVDs) A decrease in the price of DVD rentals would result in a change illustrated by:

the move from j to k in panel C.

determinants of demand curve

-change in income(inferior, normal goods) -change in the composition of population -change in taste -change in future expectations -change in price in related goods(complements and substitutes)

Figure: Supply and Demand in the Orange Juice Market) Assume that a hurricane hits Florida. In response, what would be the most likely equilibrium point in the orange juice market?

A

(Figure: Supply of Coconuts) If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts are increasing, then the movement in the model could be:

C to A.

Figure: Demand for Coconuts) If coconuts are considered a normal good and the overall income level of consumers is falling, then the movement that would take place in the model could be:

C to A.

(Figure: Supply and Demand in the Orange Juice Market) Suppose most people only drink orange juice with champagne. What will be the new equilibrium point in the orange juice market if a law banning alcohol passes?

D

Suppose you manage a corner grocery store. If peanut butter is an inferior good, what do you suppose would happen to the price and quantity of peanut butter as incomes fall during an economic recession?

The price and quantity would both increase.

(Table: The Lemonade Market) If the price of a cup of lemonade is $1.00, what will exist in the market?

a shortage of 75 cups

(Figure: Demand and Supply of Gasoline) A factor that may have changed supply from S1 to S2 is:

better technology in the production of gasoline.

detrminants of supply curve

change in natural conditions change in cost of inputs new technology government policies change in # of producers

Which of the following factors cause a movement along the existing demand curve?

change in the price of the good

Good X and Good Y are related goods. If the price of Good X increases, and the demand for Good Y shifts left, then these goods are:

complements.

(Figure: Supply of Coconuts) If the price of coconuts decreases, then the movement that would take place in the model could be:

A to B.

(Figure: Demand for Coconuts) If there is an overall increase in taste and preference for coconuts, then the movement that would take place in the model could be:

A to C.

(Figure: Supply and Demand in the Orange Juice Market) A reputable scientist asserts in a major scientific publication that drinking orange juice will increase your life span. We can expect the new equilibrium point in the orange juice market to be at:

B

(Figure: Demand for Coconuts) If a coconut is a normal good and the price of coconuts increases, then the movement that would take place in the model could be:

B to A.

The law of demand states that, other things equal:

as the price increases, the quantity demanded will decrease.

(Figure: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S1 and D) of gasoline in equilibrium are:

$2.50 and 300 gallons

(Figure: Supply of Coconuts) If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts are decreasing, then the movement in the model could be:

E to B.

If goods A and B are substitutes, a decrease in the price of good B will:

decrease the demand for good A.

(Table: The Lemonade Market) If the price of lemonade were $1.25 per cup, we would expect to see:

a market in equilibrium.

Over the past several years, consumer tastes for tattoos have increased. This means that the ________ for tattoos has ________.

demand; increased