1. Market Equilibrium Day 2
Econ 8/30

2. Warm Up: What’s Wrong?

3. Practice AP Questions
Other things constant, which of the following would NOT cause a change in the supply (shift in the supply curve) for wheat?
A decrease in the price of diesel gas (to run combine thrasher)
A decrease in the price of wheat
An increase in business taxes
An increase in the number of wheat farmers

4. 2. “Rising oil prices have caused a sharp increase in the supply for oil.” Speaking precisely, and using terms as they are defined by economists, choose the statement that best describes this quotation.
A. The quotation is correct: An increase in price always causes an increase in supply.
B. The quotation is incorrect: An increase in price always causes a decrease in supply, not a increase in supply.
C. The quotation is incorrect: An increase in price causes an increase in the quantity supplied, not an increase in supply.
D. The quotation is incorrect: An increase in price causes a decrease in the quantity supplied, not a increase in supply.

5. 3. “As the price of domestic automobiles has inched upwards, customers have found foreign autos to be a better bargain. Consequently, domestic auto sales have been decreasing, and foreign auto sales have been increasing.” Using only the info in the quotation and assuming everything else constant, which of the following best describes this statement?
A. A shift in the demand curves of both domestic and foreign autos.
B. A movement along the demand curves for both domestic and foreign autos.
C. A movement along the demand curve for domestic autos, and a shift in the demand curve for foreign autos.
D. A shift in the demand curve for domestic autos, and a movement along the demand curve for foreign autos.

6. 4. If the demand for baseball cards rises and the supply curve does not shift, then the price
a. will rise and quantity will fall
b. and quantity will rise
c. will fall and quantity will rise
d. and quantity will fall
e. will rise, but quantity may rise or fall

7. 5.Which of the following would increase the amount of an inferior good that buyers would like to purchase?
a. an increase in buyers' incomes
b. an increase in the price of a complement
c. a decrease in the price of a substitute
d. a decrease in buyers' incomes
e. a decrease in its expected future price

8. 6. Wages of bus drivers increase
6. Wages of bus drivers increase. At the same time, incomes of consumers generally increases. In the market for bus rides (a normal good), the supply of rides will _______ and the demand for rides will _________.
a. increase; increase
b. increase; decrease
c. decrease; decrease
d. decrease; increase
e. not change; increase

9. Supply/Demand Packet
Due Tomorrow 8/31