Ch4 & 5 - supply and demand

Question 1

supply curve : \ or /

Answer 1

Supply curve: /

Question 2

demand curve: \ or /

Answer 2

Demand curve: \

Question 3

Shifts in supply curve for *LABOR*: (in/left, out/right, no change) a) you suddenly decide that you need a new car b) you win $1 million dollars in the lottery c) the wage you earn doubles

Answer 3

Shifts in supply curve: (in/left, out/right, no change) a) you suddenly decide that you need a new car: curve shifts to the RIGHT (more supply) b) you win $1 million dollars in the lottery: curve shifts to the LEFT (less labor) c) the wage you earn doubles: NO CHANGE (price changes move *along* the curve)

Question 4

Shifts in Demand Curve for *CDs*: (in/left, out/right, no change) a) you buy an MP3 player b) price of CDs falls c) you win $1 in the lottery

Answer 4

Shifts in Demand Curve for *CDs*: (in/left, out/right, no change) a) you buy an MP3 player: shift to the left (less demand) b) price of CDs falls: no change (price changes move *along* the curve) c) you win $1 in the lottery: shift to right (demand increases with salary increases)

Question 5

an effective Price Floor is set _____ equilibrium

Answer 5

an effective Price Floor is set ABOVE equilibrium

Question 6

an effective Price Ceiling is set ____ equilibrium

Answer 6

an effective Price Ceiling is set BELOW equilibrium