Economics - demand & supply [1]

The law of demand argues that as prices rise

• the quantity demanded will fall

• the quantity demanded will rise

• the demand curve will shift to the right

• quantity demanded will fall due to a decrease in demand

Which of the following would cause an increase in demand for microwave ovens?

• a decrease in the price of microwave ovens

• an anticipated price fall for microwave ovens

• a lowering of production costs or cheaper resource prices

• a rise in household disposable income

An individual supply schedule demonstrates

• what will be sold in the market by a particular firm over a period of time

• what one producer would willingly offer onto the market at various prices at any given time

• the market supply of any commodity offered for sale at any given price

• a combination of points on a supply curve which are directly related

A contraction in the supply of beef is most likely to be caused by

• a decrease in the price of pork

• drought conditions in cattle grazing areas

• a decrease in the price of beef

• a tax placed on the production of beef

The discovery of a major new offshore oil deposit would result in

• a movement upwards along the supply curve for oil

• a movement downwards along the supply curve for oil

• a shift to the right to a new supply curve for oil

• a shift to the left to a new supply curve for oil

The 'law of supply' suggests that

• price and quantity supplied are directly related

• price and quantity supplied are inversely related

• movements along the supply curve are caused by a price fall

• supply will expand until market equilibrium is reached

Market equilibrium exists when

• there is no shortage or surplus in a competitive market

• quantity supplied equals quantity demanded in a competitive market

• there is no tendency for market price to rise or fall

• all of the above conditions are achieved

If quantity demanded exceeds quantity supplied then

• consumers will compete for the deficit and prices will rise

• producers will place more goods on the market and prices will increase

• demand will contract and price adjust upward to equilibrium

• new firms will enter the market

In a competitive market, equilibrium price will fall when

• demand and supply both increase

• demand remains constant and supply decreases

• supply increases proportionally more than demand increases

• supply remains constant and there is a expansion in demand

The law of demand states that the quantity of a good or service demanded by consumers varies:

• directly with a rise in price.

• inversely with a rise in price.

• proportionally with a rise in price.

• in response to changes in the conditions of demand.