Supply and Demand Review

Front

What is equilibrium in economics?

Back

A state of balance where demand equals supply.

Front

What factors can cause a shift in the supply curve?

Back

Changes in production costs, changes in technology, changes in the number of suppliers, changes in government regulations, and changes in expectations of future prices.

Front

How does a change in the number of suppliers affect the market?

Back

An increase in the number of suppliers leads to a decrease in price.

Front

Define the law of supply.

Back

As the price of a good or service increases, the quantity supplied by producers also increases, and vice versa.

Front

What is the law of demand?

Back

The law of demand states that as the price of a good or service increases the quantity demanded for that good or service will decrease, assuming all other factors remain constant.

Front

What is a demand curve?

Back

A graphical representation of the relationship between the price of a good and the quantity demanded.

Front

What is a supply curve?

Back

A graphical representation of the relationship between the price of a good and the quantity supplied.

Front

What happens when demand increases?

Back

An increase in demand typically leads to a higher equilibrium price and quantity.

Front

What happens when supply decreases?

Back

A decrease in supply typically leads to a higher equilibrium price and a lower equilibrium quantity.

Front

What is consumer surplus?

Back

The difference between what consumers are willing to pay for a good or service and what they actually pay.