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

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Question 71

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Last year, the Pottery Palace supplied 8 000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced:

A) a decrease in supply.
B) an increase in supply.
C) an increase in the quantity supplied.
D) a decrease in the quantity supplied.

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

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Question 72

Multiple Choice

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Figure 3.4 -Refer to Figure 3.4. If the price is $10:

A) there would be a surplus of 600 units.
B) there would be a shortage of 600 units.
C) there would be a surplus of 200 units.
D) there would be a shortage of 200 units.

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

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Question 73

Multiple Choice

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Olive oil producers can now sell more olive oil at a higher price. Which of the following events would have this effect?

Figure 3.5 -Refer to Figure 3.5. In a free market such as that depicted above, a surplus is eliminated by:

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for walnuts if the Centre for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?

In October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease?

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?

Assume that both the demand curve and the supply curve for tablet computers shift to the right, but the demand curve shifts more than the supply curve. As a result:

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?

Elle decreased her consumption of bananas when the price of peanut butter increased. For Elle, peanut butter and bananas are:

If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the:

Figure 3.2 -Refer to Figure 3.2. A decrease in productivity would be represented by a movement from:

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?

Holding everything else constant, a decrease in the price of tablet computers will result in:

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is a:

Blu-ray players were introduced to the market in 2006, and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction. How did this change in technology affect the market for Blu-ray players?

Orange juice producers sell a lower quantity of orange juice even with a higher market price. Which of the following events would have this effect?

Figure 3.8 -Refer to Figure 3.8. The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₂ (point B) . If there is a decrease in the price of fertiliser used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

Figure 3.6 -Refer to Figure 3.6. The figure above represents the market for canvas tote bags. Compare the conditions in the market when the price is $50 and when the price is $35. Which of the following describes how the market differs at these prices?