Markets, Prices & Equilibrium

The Law of Demand states that as price decreases...

• Quantity demanded decreases

• Quantity demanded increases

• Production increases

• Quality Decreases

Supply depends on the willingness and ability of...

• consumers to purchase

• producers to sell

• donors to contribute

• advertisers to promote

According to the law of supply, what happens as price increases?

• The quantity supplied increases

• The quantity supplied decreases

• The supply curve shifts to the left

• The supply curve shifts to the right

The equilibrium price is the price at which...

• demand and supply curves intersect

• consumers start reducing demand

• producers’ total revenue is highest

• neither demand nor supply will shift

In the summer picnic season, a sharp rise in the price of burgers may lead to an increase in the demand for the substitute good, _____.

• coleslaw

• chicken

• relish

• buns

Which of the following will cause the demand to move along the demand curve rather than shifting it?

• preferences

• expectations

• price

• income

Which of these is most likely to happen to demand for clothes in a clothing store when blizzards keep customers at home?

• The demand curve becomes steeper

• The demand curve shifts to the right

• The demand curve becomes flatter

• The demand curve shifts to the left

Which of these would most likely increase the supply of soccer balls?

• a government tax on sporting goods

• a decrease in the price of raw materials

• an increase in the supply of tennis balls

• a transportation strike (truckers on strike)

Which of these situations best illustrates market equilibrium?

• The amount of soap for sale matches the amount of soap that people want to buy.

• Everyone who wants or needs soap can easily afford to buy it

• Soap production ensures a good profit for the manufacturer

• The price of soap does not vary much from week to week

What might result from setting a price ceiling on the price of rent for apartments?

• Houses are broken up into apartments to meet the demand.

• Construction jobs increase with the building of new apartment buildings.

• People can find apartments but cannot afford to rent them.

• More people want to rent apartments than the number of apartments available to rent.