Question : Figure 3-7 11) Refer to Figure 3-7. Assume that the graphs : 1267043

Figure 3-7

11) 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)

12) 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)

13) 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)

14) 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)

15) 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)

16) 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)

17) 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)

18) 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.

19) 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.

20) “The price of compact fluorescent light bulbs fell because of improvements in production technology.  As a result, the demand for incandescent light bulbs decreased.  This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further.”  Evaluate this statement.

A) The statement is false.  A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.

B) The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell. 

C) The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits. 

D) The statement is false because it confuses the law of demand with the law of supply.