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Exam 3: Where Prices Come From: The Interaction of Supply and Demand

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Question 151

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Figure 3.14 Alt text for Figure 3.14: In figure 3.14, a graph plotting intersecting demand and supply curves represents the change in equilibrium point in the apple market with the decrease in the price of a substitute fruit, orange and the increase in the wages of apple workers. Long description for Figure 3.14: The x-axis is labelled, Quantity and the y-axis is labelled, Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 is parallel with curve D1, but is plotted to the left.Curve S1 is a straight line which slopes up from the bottom right corner to the top left corner.Curve S2 is parallel to curve S1, but is plotted to the left.The 4 curves intersect at 4 points; A, B, on the right side of the lines, and C and D, on the left sides of the lines. -Refer to Figure 3.14.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point

A) The equilibrium point will move from A to E.
B) The equilibrium point will move from A to B.
C) The equilibrium point will move from A to C.
D) The equilibrium will first move from A to B, then return to A.

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

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Question 152

Multiple Choice

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Figure 3.16 Alt text for Figure 3.16: In figure 3.16, a graph plotting intersecting demand and supply curves represents the change in equilibrium point in the motorcycle market with the increase in price of engines and wages of motorcycle manufacturers. Long description for Figure 3.16: The x-axis is labelled, Quantity and the y-axis is labelled, Price.Curve D1 is a straight line which slopes down from the top left corner to the bottom right corner.Curve D2 is parallel with curve D1, but is plotted to the left.Curve S1 is a straight line which slopes up from the bottom right corner to the top left corner.Curve S2 is parallel to curve S1, but is plotted to the left.The 4 curves intersect at 4 points; A, B, on the right side of the lines, and C and D, on the left sides of the lines -Refer to Figure 3.16.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₁ (point

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

E) B) and C)
F) B) and D)

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Question 153

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In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

If, in the market for apples, the supply has decreased, then

Figure 3.5 Alt text for Figure 3.5a: In figure 3.5a, a graph of intersecting supply and demand curves representing the markets for original Picasso paintings and designer jeans. Long description for Figure 3.5a: The x-axis is labelled, Quantity, and the y-axis is labelled, Price.Curve Supply is a straight line which slopes up from the bottom left corner to the top right corner.Curve Demand is a straight line which slopes down from the top left corner to the bottom right corner.The 2 curves intersect at their respective midpoints. Alt text for Figure 3.5b: In figure 3.5b, a graph of intersecting supply and demand curves represents one of the two markets for original Picasso paintings and designer jeans. Long description for Figure 3.5b: The x-axis is labelled, Quantity, and the y-axis is labelled, Price.Curve Demand is a straight line which slopes down from the top left corner to the bottom right corner.Curve Supply is a straight, vertical line beginning from approximate midpoint of the x axis.The 2 curves intersect at their respective midpoints. -Refer to Figure 3.5.The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings and the market for designer jeans.Which graph most likely represents which market?

Whether a good is normal or inferior depends on

Following the successful launch of Red Bull in the Canadian market in 2004, companies such as Coca Cola, Pepsi, and many others have introduced products to compete with Red Bull.The energy drinks introduced to compete with Red Bull would be considered

Which of the following would shift the supply curve for energy drinks to the left?

All else equal, a successful marketing campaign for energy drinks would cause the equilibrium price of energy drinks to ________ and the equilibrium quantity of energy drinks to ________.

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is

A positive technological change will cause the quantity supplied of a good to increase.

Suppose that when the price of hamburgers decreases, the Li family increases their purchases of ketchup.To the Li family

Table 3.5 -Refer to Table 3.5.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units. What is the value of producer surplus?

If provinces decide to cover part of the price of voluntary laser eye surgery and more doctors decide to enter the field of laser eye surgery, what will happen in the market for laser eye surgery as a result of these two factors?

One would speak of a movement along a supply curve for a good, rather than a change in supply, if

A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

Which of the following describes a characteristic of a perfectly competitive market?

Figure 3.3 Alt text for Figure 3.3: In figure 3.3, a graph of the effect of an increase in the price of inputs on the supply curve. Long description for Figure 3.3: The x-axis is labelled, Quantity, and the y-axis is labelled, Price.Curve Supply, S1, is a straight line which slopes up from the bottom left corner to the top right corner.2 points, A and B, are marked in the middle of curve S1.Curve S2 follows the same slope as curve S1, but is plotted to the right.A right pointing arrow indicates the change from curve S1 to curve S2. -Refer to Figure 3.3.An increase in the number of firms in the market would be represented by a movement from

Assume there is a surplus in the market for hybrid automobiles.Which of the following statements correctly describes this situation?

If in the market for blueberries, the supply curve has shifted to the left,