Identify and explain the errors found in the following statements: i. Demand decreases, causing prices to fall. Lower prices cause demand to increase. Therefore, prices increase to their original levels. ii. The supply of cereal in China increases, causing cereal prices to fall. Lower prices always mean that Chinese households spend more on cereal.

Consider the market for apples. For each of the following separate scenarios, determine if the demand curve or supply curve shifts, and in which direction does the curve shift. Farmers receive subsidies for growing apples. [ Choose ] [ Choose ] Supply of apples shifts to the left. Price of apples increases. Demand for apples shifts to the left. Supply of apples shifts to the right. A new apple commercial airs on TV. Demand for apples shifts to the right. Neither demand for apples nor supply of apples shifts. A study is released showing apples improve eyesight. [ Choose ] Price of oranges decreases. Oranges and apples are substitutes. [ Choose ] Because of drought, the amount of apples harvested decreases significantly. [ Choose ] > >

If the expected future price of droids increases, then: the current supply of droids will decrease. the current supply of droids will increase. the current quantity of droids supplied will decrease. the current quantity of droids supplied will increase.

Given the products and conditions below, indicate how the events affect the demand, supply, equilibrium price and quantity of the goods. (a)   Videotapes specifically .  The price of DVDs and DVD players decreases.  New technology makes videotapes easier to produce.  The shift in demand is greater than shift in supply.   (b) Tomatoes.  FDA publicly announces that eating tomatoes and tomato-based products can significantly reduce one’s risk of developing cancer.  An unexpected freeze late in the tomato season destroys a significant portion of this year’s crop.  The shift in supply is greater than shift in demand.