Review Quiz
Supply & Demand
Use the Supply and Demand Graphs below to answer the following questions.
1. The impact on the market for homes in Texas, a major producer of oil, of a large increase in the price of oil?
2. The impact on the market for automobiles of a substantial wage increase won by the UAW (union representing the auto workers) this fall in their negotiations with GM.
3. The impact on the market for gasoline of increased auto travel in the US and the government's decision to sell some of the oil it has stored in its strategic petroleum reserve.
4. The impact on the market for illegal drugs of the president's new war on drugs which includes expanding prison capacity, aiding the governments of South America in their fight against the drug cartels, and tougher enforcement of drug laws in the US.
5. An alternative solution to the drug problem is the increased education on the negative impact drugs have on one's health. What will be the combined impact of these two approaches on the market for drugs.
6. The impact on the market for American produced cars of the decision to impose voluntary quotas on the Japanese export of cars to the US designed to protect American workers and companies from competition.
7. The impact on the market for automobiles of the decision on the part of the monetary authorities in this country to lower interest rates.
9. The impact on the price of Apple stock of the announcement of a greater than expected loss in the current quarter.
10. The impact on the market for CD's of the introduction of DAT (digital audio tapes) which are said to give the same sound quality on tapes as is currently available only on CD's
11. The impact on the labor market of the increasing labor force participation rates of women.
12. The impact on the market for NCS computers of news of a technological breakthrough that will allow them to produce faster machines at a lower per unit cost of production.
13. The impact on the market for homes of the decision on the part of the monetary authorities in this country to raise interest rates.
14. The impact on the automobile market of higher labor productivity due to improvements in labor-management relationships and a robust, booming economy.
15. The president has declared war on drugs. His program is designed to reduce the supply of drugs by expanding prison capacity, aiding the governments of South America in their fight against the drug cartels, and tougher enforcement of drug laws in the US. If in fact the demand for drugs in the US is unresponsive to price changes, as many experts suggest, then the reduction in supply is likely to result in:
16. An alternative solution to the drug problem is the legalization of drugs. The experts suggest that this will result in a substantial downward shift in the supply curve of drugs as more firms enter to supply the newly legal product. Others suggest that the legalization will result in an increase in the demand curve. If both of these views are correct then we can expect:
Use the following graphs to answer the next few questions.
17. The impact on the market for eggs of a new study questioning the link between the consumption of eggs and higher cholesterol levels.
18. The impact on the market for steel of a substantial wage increase won by the steel workers' union this fall in their negotiations.
19. The impact on the market for stock in Sears of the recent announcement of record corporate profits.
20. The impact on the labor market of projected increases in the rate of immigration into the US.
21. Impact on the market for beef of a new medical study which weakens the link between cholesterol and beef consumption.
22. The impact of the introduction of Windows on the market for Macintosh computers.
23. Impact of rising inner city crime rates on employment of private security guards.
24. If marijuana were to be legalized, many believe that there would be both an increase in supply and demand. If that were in fact the case, which of the following could you predict with perfect certainty?
25. The U.S. government banned cigarette advertising on radio and television after January 1971. You would expect to find that, after the ban took effect,
26. The Jailhouse Inn in Newport, RI charges $150 per room in the summer season and $75 during the winter months. If the number of rooms and operating costs are constant year round, these price changes indicate:
27. In 1989 peanut production in the US was centered in the Southeast with Georgia the nation's largest producer of peanuts. That year there was a serious drought in the Southeast. How would we describe this using the Supply-Demand model?
28. On Cape Cod there has been an erosion of the bluffs which is beginning to encroach on the yards of some of the beachside homes and is turning away buyers. It may be reflected on a graph of supply and demand for this property by:
It may be reflected on a graph of supply and demand for this property by:
29. Which of the following would cause an outward shift in the demand curve for CD players.