Wk 5 - Economics - The Price Mechanism Pt2

The Law of Demand states that when prices are relatively low,

• people are less likely to purchase goods or services
• it is nearly impossible for companies to make money
• demand is relatively high
• demand is relatively low

The Law of Demand states that when prices are relatively high,

• people are more likely to purchase goods or services
• it is nearly impossible for companies to make money
• demand is relatively high
• demand is relatively low

When the quantity demanded increases, it means that

• a larger amount of goods are demanded because the price is lower than before
• a larger amount of goods are demanded because the price is higher than before
• the entire demand curve has increased in value
• the entire demand curve has decreased in value

When demand decreases, it means that

• a smaller amount of goods are demanded because the price is lower than before
• a smaller amount of goods are demanded because the price is higher than before
• the entire demand curve has increased in value
• the entire demand curve has decreased in value

Which of the following events would cause demand to increase?

• Product goes out of style
• Price of a substitute good decreases
• Price of a complementary good increases
• Consumers have more money

Which of the following events would cause demand to decrease?

• Consumers leave the market
• Product is a fad
• Consumers expect good things to happen in the future
• Suppliers enter the market

The Law of Supply states that when prices are relatively low, 

• people are more liekly to purchase goods or services
• it is nearly impossible for companies to make money
• supply is relatively high
• supply is relatively low

The Law of Supply states that when prices are relatively high, 

• people are more liekly to purchase goods or services
• it is nearly impossible for companies to make money
• supply is relatively high
• supply is relatively low

When the quantity supplied increases, it means that

• a larger amount of goods are supplied because the price is lower than before
• a larger amount of goods are supplied because the price is higher than before
• the entire supply curve has increased in value
• the entire supply curve has decreased in value

When supply decreases, it means that

• a smaller amount of goods are supplied because the price is lower than before
• a smaller amount of goods are supplied because the price is higher than before
• producers are willing to supply more at every price
• producers will now supply less at every price