Econ Basics: Supply & Demand

Front

What is the law of demand?

Back

As the price of a good increases, the quantity demanded decreases.

Answer explanation

As the price of a good increases, the quantity demanded decreases.

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DOK Level 1: Recall

Front

Which of the following best describes the law of supply?

Back

As the price of a good increases, the quantity supplied increases.

Answer explanation

As the price of a good increases, the quantity supplied increases.

Tags

DOK Level 1: Recall

Front

What is the equilibrium price in a market?

Back

The price at which the quantity demanded equals the quantity supplied.

Answer explanation

The price at which the quantity demanded equals the quantity supplied.

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DOK Level 1: Recall

Front

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

Back

The demand for the original good will increase.

Answer explanation

If the price of a substitute good increases, consumers are more likely to choose the original good, leading to an increase in demand for the original good.

Tags

DOK Level 1: Recall

Front

What is a price ceiling?

Back

A maximum price set by the government that can be charged for a good or service.

Answer explanation

A price ceiling is a maximum price set by the government that can be charged for a good or service.

Tags

DOK Level 1: Recall

Front

Which factor is most likely to cause a shift in the supply curve?

Back

A change in the price of inputs.

Answer explanation

A change in the price of inputs is most likely to cause a shift in the supply curve as it directly impacts production costs and supply levels.

Tags

DOK Level 1: Recall

Front

What happens to the equilibrium price if there is an increase in demand while supply remains constant?

Back

The equilibrium price increases.

Answer explanation

If demand increases while supply remains constant, the equilibrium price will increase as buyers are willing to pay more for the limited supply.

Tags

DOK Level 1: Recall

Front

Which of the following is an example of a normal good?

• As income increases, the demand for this good decreases.
• As income increases, the demand for this good remains unchanged.
• As income increases, the demand for this good increases.
• As income decreases, the demand for this good increases.

Back

As income increases, the demand for this good increases.

Answer explanation

As income increases, the demand for this good increases.

Tags

DOK Level 1: Recall

Front

What is the effect of a price floor set above the equilibrium price?

Back

It creates a surplus.

Answer explanation

Setting a price floor above the equilibrium price creates a surplus because the quantity supplied exceeds the quantity demanded at that higher price.

Tags

DOK Level 1: Recall

Front

What causes a movement along the demand curve for a good?

Back

A change in the price of the good.

Answer explanation

A change in the price of the good would cause a movement along the demand curve for a good, as it represents a change in quantity demanded due to a change in price.

Tags

DOK Level 1: Recall