Demand, Supply

Which factor might cause an increase in the supply of a product?

• a decrease in productivity

• fewer sellers in the marketplace

• the introduction of new technology

• an increase in the cost of raw materials

The law of supply states...

• the supply of a product is not affected by its price.

• when the supply of a product decreases, the price of the product falls.

• when the supply of a product increases, the price of the product rises.

• the quantity supplied of a product will increase when the price of that product increases.

A decrease in the price of a particular product will result in

• a decrease in the demand for that product.

• a shift in the production possibilities frontier.

• an increase in the quantity demanded of that product.

• an increase in the quantity supplied of that product.

A price set below the current market price is a characteristic of a....

• price floor

• regular price

• price cieling

• equilibrium price

How do supply and demand influence market price?

• Supply determines market price because the seller sets the price.

• The price is determined by the highest price consumers are willing to pay

• The price is determined by the lowest price producers are willing to accept

• The market clearing price is where quantity demanded is equal to quantity supplied.

− Income increases

− Price of complementary products decreases

These changes would MOST LIKELY have which impact on the market?

• Supply increases

• Supply decreases

• Demand increases

• Demand decreases

What would be the situation if the price was moved from p2 to p3?

• the price would be raised

• the price would be too high

• there would be a surplus of widgets

• there would be a shortage of widgets

If producers moved the price from P3 to p1.....

• producers would encounter a shortage.

• buyers would likely purchase fewer widgets.

• producers would be less willing to make widgets.

• buyers would scramble to get all available widgets.

 Income

 Consumer Expectations

 Population

 Consumer Tastes

 Complements and Substitutes

These would change what part of the market?

• supply

• demand

• Quantity supplied

• Quantity demanded

Which BEST explains the relationship shown on the graph?

• A product becomes scarcer as its price decreases.

• The price of a product has no effect on consumer demand.

• Fewer people will buy a product when its price increases.

• A product costs more when many people want to purchase it.