Unit 2 Review!

Front

What is a shortage in a market?

Back

A shortage occurs when the quantity demanded exceeds the quantity supplied at a given price, leading to unmet consumer demand.

Front

What is a surplus in a market?

Back

A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price, resulting in excess goods that are not sold.

Front

What is market equilibrium?

Back

Market equilibrium is the point where the quantity demanded equals the quantity supplied, resulting in a stable market price.

Front

What happens when the price is set below the equilibrium price?

Back

When the price is set below equilibrium, a shortage occurs as buyers want to purchase more than sellers are willing to supply.

Front

What is the law of supply?

Back

The law of supply states that, all else being equal, an increase in price results in an increase in the quantity supplied.

Front

What is the law of demand?

Back

The law of demand states that, all else being equal, an increase in price results in a decrease in the quantity demanded.

Front

What is the effect of excess demand on price?

Back

Excess demand creates upward pressure on price, leading to potential price increases until equilibrium is reached.

Front

What happens to the supply curve when production costs decrease?

Back

When production costs decrease, the supply curve shifts to the right, indicating an increase in supply at all price levels.

Front

What is a demand curve?

Back

A demand curve is a graphical representation showing the relationship between the price of a good and the quantity demanded.

Front

What is a supply curve?

Back

A supply curve is a graphical representation showing the relationship between the price of a good and the quantity supplied.