Understanding Supply and Demand Concepts

Front

What is the law of demand?

Back

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

Front

What is the law of supply?

Back

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

Front

What is market equilibrium?

Back

The point where supply equals demand.

Front

What is a price floor?

Back

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

Front

What is a price ceiling?

Back

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

Front

In the circular flow model, what do households provide to firms?

Back

Labor, land, and capital

Front

In the circular flow model, what do firms provide to households?

Back

Goods and services

Front

What happens to the quantity demanded when the price of a good decreases?

Back

It increases.

Front

What happens to the quantity supplied when the price of a good decreases?

Back

It decreases.

Front

What is the result of setting a price floor above the equilibrium price?

Back

Surplus