Question 1

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

When the wages of seamstresses rise, the cost of producing clothing will increase, which will shift the supply curve to the left, as shown in Panel (b). As a result, the equilibrium price will increase, as shown by the upward arrow, while the equilibrium quantity will decrease, as shown by the leftward arrow. This is consistent with the law of supply, which states that firms will offer less of a good at a higher price, ceteris paribus. The increase in price will reflect the higher cost of production, and will also signal to consumers to reduce their quantity demanded, which will eventually eliminate the excess supply in this market.

Question 2

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for almonds.Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 3

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 4

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 5

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for Blu-ray discs.Which panel best describes what happens in this market if there is a substantial increase in the price of Blu-ray players?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 6

An increase in the demand for lobster due to changes in consumer tastes,accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster,will result in
A)a decrease in the equilibrium quantity of lobster and no change in the equilibrium price.
B)an increase in the equilibrium price of lobster and no change in the equilibrium quantity.
C)an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
D)a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.

Accepted Answer

The answer of An increase in the demand for lobster...

Question 7

An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise.Holding everything else constant,how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles)?
A)The supply of gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would decrease.
B)The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase.
C)The demand for gasoline-powered automobiles would decrease because consumers could afford to buy fewer gasoline-powered automobiles.
D)The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would decrease.

Accepted Answer

An increase in the price of electric automobiles would lead consumers to look for alternatives, such as gasoline-powered automobiles. Therefore, the demand for gasoline-powered automobiles would increase, causing the equilibrium price of gasoline-powered automobiles to increase. This is because a shift in the demand curve to the right would lead to a higher equilibrium price and quantity. Option A can be ruled out as an increase in the supply of gasoline-powered automobiles is not a likely outcome of an increase in input costs for electric automobiles. Option C is incorrect as the increase in the price of electric automobiles would not necessarily affect consumers' ability to buy gasoline-powered cars. Option D is incorrect as the demand for gasoline-powered vehicles would lead to an increase in equilibrium price, not a decrease.

Question 8

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result
A)both the equilibrium price and quantity of MP3 players will decrease.
B)the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Accepted Answer

When the supply curve shifts more than the demand curve, it means that there is a greater increase in the supply of MP3 players compared to the increase in demand. This leads to a surplus of MP3 players in the market which puts pressure on prices, causing them to decrease. However, the increase in supply also means that there are more MP3 players available for consumers to purchase, resulting in an increase in the equilibrium quantity. Therefore, the equilibrium price of MP3 players will decrease, and the equilibrium quantity will increase.

Question 9

A decrease in the demand for soft drinks due to changes in consumer tastes,accompanied by an increase in the supply of soft drinks as a result of reductions in input prices,will result in
A)a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price.
B)a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.
C)a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
D)an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.

Accepted Answer

A decrease in demand will typically lead to a decrease in equilibrium quantity, while an increase in supply will lead to a decrease in equilibrium price. Therefore, we can expect a decrease in the equilibrium price of soft drinks. As for the equilibrium quantity, it may either increase or decrease depending on how much the decrease in demand offsets the increase in supply. Hence, the correct answer is option C.

Question 10

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements.What panel describes what happens in this market when the price of bratwurst falls?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 11

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt.Which panel describes what happens in the market for frozen yogurt when the price of ice cream,a substitute product,increases?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

In panel (c), the demand curve for frozen yogurt shifts to the right, indicating an increase in demand, which could occur if the price of a substitute product (ice cream) increases. This leads to a higher equilibrium quantity of frozen yogurt being sold, and potentially a higher equilibrium price as well.

Question 12

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 13

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions)?
A)The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
B)The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
C)The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players.
D)The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Accepted Answer

The answer of Positive technological change in the production of...

Question 14

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for coffee.What happens in this market if buyers expect the price of coffee to rise?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

In anticipation of a price increase, buyers are likely to purchase more coffee now to avoid higher prices later, shifting the demand curve to the right, as depicted in Panel (c). This shift represents an increase in demand due to the expectation of future price increases.

Question 15

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for tuna.Which panel best describes what happens in this market when there is a decrease in the productivity of commercial fishermen?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

Panel (b) shows a leftward shift in the supply curve, indicating a decrease in the productivity of commercial fishermen. This results in a higher equilibrium price and lower equilibrium quantity, as producers are now willing to supply less at any given price.

Question 16

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for laptop computers.Which panel best describes what happens in this market when the price of computer hard drives falls?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 17

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result
A)both the equilibrium price and quantity of MP3 players will increase.
B)the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease.
C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase.
D)the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease.

Accepted Answer

The answer of Assume that both the demand curve and...

Question 18

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 19

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for Fruitopia,a soft drink.Which panel describes what happens in the market for Fruitopia when the price of Snapple,a substitute product,decreases?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Question 20

Figure 3-7
 
-Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for ramen noodles,an inferior good.Which panel describes what happens in this market as a result of an increase in income?
A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Accepted Answer

The answer of Figure 3-7
 
-Refer to Figure 3-7.Assume that...

Quiz 3: Where Prices Come From: the Interaction of Demand and Supply

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for women's clothing.Which panel best describes what happens in this market when the wages of seamstresses rise?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for almonds.Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for rice.What happens in this market if buyers expect the price of rice to fall?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements.What panel describes what happens in this market when the price of steak rises?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for Blu-ray discs.Which panel best describes what happens in this market if there is a substantial increase in the price of Blu-ray players?

An increase in the demand for lobster due to changes in consumer tastes,accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster,will result in

An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise.Holding everything else constant,how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles) ?

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result

A decrease in the demand for soft drinks due to changes in consumer tastes,accompanied by an increase in the supply of soft drinks as a result of reductions in input prices,will result in

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements.What panel describes what happens in this market when the price of bratwurst falls?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt.Which panel describes what happens in the market for frozen yogurt when the price of ice cream,a substitute product,increases?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets.Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles?

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions) ?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for coffee.What happens in this market if buyers expect the price of coffee to rise?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for tuna.Which panel best describes what happens in this market when there is a decrease in the productivity of commercial fishermen?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for laptop computers.Which panel best describes what happens in this market when the price of computer hard drives falls?

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve.As a result

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for used clothing,an inferior good.Which panel describes what happens in this market as a result of a decrease in income?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for Fruitopia,a soft drink.Which panel describes what happens in the market for Fruitopia when the price of Snapple,a substitute product,decreases?

Figure 3-7 -Refer to Figure 3-7.Assume that the graphs in this figure represent the demand and supply curves for ramen noodles,an inferior good.Which panel describes what happens in this market as a result of an increase in income?