Supply & Demand

What might happen if the demand for a new type of sneaker began rising quickly?

• The manufacturer would begin making fewer sneakers

• The sneaker company would raise the price of the sneakers

• People would refuse to pay more money for the sneakers

• The sneaker company would lower the price of the sneakers

According to the laws of supply and demand, when will companies produce more of a product?

• When the price people will pay for it goes down

• When demand decreases

• When they can sell it for a higher price

• When the economy turns downward

Which of these is neither a good nor a service?

• A gallon of gasoline

• A piano lesson

• A meal at a restaurant

• A $20 bill

The equilibrium point is at the confluence of the supply and demand curves. What does "confluence" mean?

• Topmost point

• Intersection

• Midpoint

• Lowest point

Challenge: Who would set the equilibrium point for the price of a new type of sneaker?

• The manufacturer

• The consumer

• Either A or B - it depends on the cost to produce the sneaker

• Neither A nor B - the equilibrium point is set by market forces

Why do prices go down when consumers start saving their money?

• Consumers become less willing to spend money on goods and services

• Manufacturers start producing fewer products

• Demand for currency goes up as people begin saving

• Demand for goods begins to outpace supply

What is likely to happen if the price of a new pair of sneakers went up?

• Demand for the sneakers would increase

• Demand for the sneakers would decrease

• Merchants would begin offering sales on the sneakers

• It would be impossible to find a pair in stores

What factor is most likely to cause an increase in demand for a new type of automobile?

• A commercial in which the car is endorsed by a popular celebrity

• A comedian making fun of the car on late-night TV

• A rumor that the car's gas tank is prone to explosion

• The price of the car going up

Which condition would lead to the highest prices?

• Low supply, high demand

• High supply, high demand

• High supply, low demand

• Low supply, low demand

Challenge: When do we say that the market has "cleared?"

• When consumers begin saving their money

• When demand outpaces supply

• When supply outpaces demand

• When supply and demand balance out