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Exam 3: Supply and Demand

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Question 111

Multiple Choice

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Use the following to answer questions Figure: Four Markets for DVDs -(Figure: Four Markets for DVDs) Look at the figure Four Markets for DVDs. If D₁ or S₁ is the original curve and D₂ or S₂ is the new curve, which of the graphs illustrates what may happen in the market for DVDs if there is an increase in the cost of a movie ticket at the local theater?

A) A
B) B
C) C
D) D

E) A) and B)
F) A) and C)

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Question 112

Multiple Choice

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The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that in the market for flights:

A) supply increased.
B) supply decreased.
C) demand increased.
D) demand decreased.

E) All of the above
F) C) and D)

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Question 113

Multiple Choice

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Use the following to answer questions Figure: The Supply of DVD Rentals -(Figure: The Supply of DVD Rentals) Look at the figure The Supply of DVD Rentals. A decrease in the price of DVD rentals would result in a change illustrated by the move from:

Use the following to answer questions Figure: Shifts in Demand and Supply II -(Figure: Shifts in Demand and Supply II) Look at the figure Shifts in Demand and Supply II. The graph shows how supply and demand might shift in response to specific events. Suppose a drought destroys one-third of the nation's peanut crop. Which panel BEST describes how this will affect the market for peanuts?

Apple and Samsung are large corporations that produce smart phones, the iPhone and the Galaxy, respectively. They are constantly trying through expensive advertising and product innovations to persuade customers to buy their brand. Is the smart phone market a competitive in the economic sense defined in Chapter 3? Why or why not?

Substitutes in production suggest that a producer with a fixed set of resources initially will need to reduce production of one good when the producer:

Which of the following illustrates the law of demand?

Use the following to answer questions Figure: Shifts in Demand and Supply IV -(Figure: Shifts in Demand and Supply IV) Look at the figure Shifts in Demand and Supply IV. The figure shows how supply and demand might shift in response to specific events. Suppose oil becomes more expensive. Which panel BEST describes how this will affect the market for gasoline, which is made from oil?

French fries and hamburgers are complements in consumption. Suppose the cost of the ingredients used to make hamburgers rises, so that the price of a hamburger rises. Then the equilibrium relative price of french fries _____ and the equilibrium quantity _____.

Use the following to answer questions Figure: Demand for Coconuts -(Figure: Demand for Coconuts) Look at the figure Demand for Coconuts. If coconuts are a normal good and consumers believe that the price of coconuts will rise significantly in the near future, it will be represented in the figure as a movement from:

A technological advance in the production of automobiles will _____ the _____ automobiles.

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

For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes _____ in the equilibrium price of a hamburger and _____ in the equilibrium quantity of hamburgers.

An increase in the price and an ambiguous change in quantity is most likely caused by:

Recent research suggests that certain plastic containers may have cancer-causing elements in them. As a result of this research, one would expect:

Suppose the equilibrium price of good X is $25 and the equilibrium quantity is 124 units. If the price of good X is $2:

Which of the following is NOT a determinant of supply?

Excess supply occurs when:

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 new price and quantity could have been caused by:

Use the following to answer questions Figure: Supply, Demand, and Equilibrium -(Figure: Supply, Demand, and Equilibrium) Look at the figure Supply, Demand, and Equilibrium. In the figure, there will be excess demand for the good at a price of P₃.