Supply and Demand

Supply and Demand

Demand

• Keyword: Consumer

• Slope: Downward (negative)

• Desire and ability of consumers to purchase a good at a range of prices

• Consumers demand lower quantities at higher prices

Law of Demand:

• Inverse relationship amongst price and quantity:

• As price increases, quantity demanded decreases

• When prices decrease, quantity demanded increases

• WE BUY MORE AT LOWER PRICES

Multiple Choice

The term, "diminishing utility" is often used to describe the slope of the demand curve. Why is this?

• As you consume more of a good, the total satisfaction you obtain tends to rise

• As you consume more of a good, the total satisfaction you obtain tends to fall

• As you produce more of a good, the average utility gained decreases

Multiple Select

Select all that apply. Which is true when graphing demand?

• Price is measured on the vertical axis

• Quantity is measured on the horizontal axis

• It's slope is negative

• It has an upward slope

Multiple Choice

Which illustration depics a demand curve that consists of a point, where 3 units are demanded at a price of $9

Fill in the Blanks

When prices increase, quantity demanded

Supply

• Keyword: Producer

• Slope: Upward (positive)

• Total amount of a product that is available to purchasers

• The supply curve shows the quantity supplied of a good at different price levels

Law of Supply

• Positive (direct) relationship amongst price and quantity

• As price increases, supply increases

• As price decreases, supply decreases

• At higher prices, producers supply higher quantities to maximize profit

Multiple Select

Select all that apply. The law of supply states that__________.

• as price increases, supply increases

• as price increases, demand decreases

• as prices decrease, supply increases

• as price decreases, supply decreases

Multiple Choice

Which graph depicts a supply curve?

• A

• B

• C

• D

Multiple Choice

Supply refers to the actions of _________, whereas demand refers to the actions of ________.

• producers, consumers

• quantities, prices

• consumers, producers

• prices, quantities

Multiple Select

(Select all that apply) Which is true about supply curves?

• they have positive slopes

• they show quantity supplied at different price levels

• as prices increase, quantities increase

• they have an upward slope

• they have a negative slope

Multiple Choice

The supply curve is upward sloping because

• at higher prices, consumers demand less

• as price increases, suppliers earn higher profits

• as price increases, so do costs