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Exam 4: The Market Forces of Supply and Demand

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Question 201

True/False

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Price will rise to eliminate a surplus.

A) True
B) False

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Question 202

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Which of the following is an example of a market?

A) a gas station
B) a garage sale
C) a barber shop
D) All of the above are examples of markets.

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

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Question 203

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Table 4-2 -Refer to Table 4-2.If these are the only four buyers in the market,then the market quantity demanded at a price of $8 is

The highest form of competition is called

Figure 4-11 -Refer to Figure 4-11.What is the equilibrium quantity in this market?

The market for ice cream is

Suppose we are analyzing the market for hot chocolate.Graphically illustrate the impact each of the following would have on demand or supply.Also show how equilibrium price and equilibrium quantity would change. 5.Suppose we are analyzing the market for hot chocolate.Graphically illustrate the impact each of the following would have on demand or supply.Also show how equilibrium price and equilibrium quantity would change. a.Winter starts and the weather turns sharply colder. b.The price of tea,a substitute for hot chocolate,falls. c.The price of cocoa beans decreases. d.The price of whipped cream falls. e.A better method of harvesting cocoa beans is introduced. f.The Surgeon General of the U.S.announces that hot chocolate cures acne. g.Protesting farmers dump millions of gallons of milk,causing the price of milk to rise. h.Consumer income falls because of a recession,and hot chocolate is considered a normal good. i.Producers expect the price of hot chocolate to increase next month. j.Currently,the price of hot chocolate is $0.50 per cup above equilibrium.

The law of demand states that,other things equal,

The actions of buyers and sellers naturally move markets toward equilibrium.

An increase in demand will cause an increase in price,which will cause an increase in quantity supplied.

Table 4-6 A country club usually only allows members to purchase tickets for its celebrity golf tournament,but the club is considering allowing non-members to purchase tickets this year.The demand and supply schedules are as follows: -Refer to Table 4-6.If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $20,then there will be

Figure 4-12 The diagram below pertains to the demand for turkey in the United States. -Refer to Figure 4-12.All else equal,the destruction of thousands of turkeys would cause a move

Sellers as a group determine the demand for a product,and buyers as a group determine the supply of a product.

Figure 4-13 The diagram below pertains to the supply of paper in university markets. -Refer to Figure 4-13.All else equal,buyers expecting paper to be more expensive in the future would cause a current move

Sellers respond to a shortage by cutting their prices.

Figure 4-2 -Refer to Figure 4-2.The movement from point A to point B on the graph is caused by

In a market economy,who or what determines who produces each good and how much is produced?

A movement along the supply curve might be caused by a change in

Figure 4-14 Panel (a) Panel (b) Panel (c) Panel (d) -Refer to Figure 4-14.Panel (c) shows which of the following?

Music compact discs are normal goods.What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties,compact disc players become cheaper,more firms start producing music compact discs,and music lovers experience an increase in income?