Year 11 Unit 1 Topic 3 Market Forces Week 2

The law of demand tells us that consumers will buy more of something at a lower price than they would at a higher price.

• true

• false

The supply of a commodity is the quantity of it that will be purchased over a given time at a given price.

• true

• false

When the price mechanism operates freely in a perfectly competitive market, without any restrictions placed on it, price is the sole factor responsible for equating supply and demand.

• true

• false

One of the main factors that influences the quality of a commodity demanded is the seller's expectation for the future.

• true

• false

If the price of a commodity changes, the demand for it will change and a new demand curve must be drawn to indicate the resultant increase or decrease.

• true

• false

Increases or decreases in supply may be bought about by changes in the costs of production.

• true

• false

The real world behaves exactly like the competitive market model.

• true

• false

Demand is measured in terms of:

• desire for a commodity

• desire backed by the ability to purchase

• need for a commodity

• wants and income

The law of diminishing marginal utility explains why we get:

• more satisfaction from each extra unit we consume of a commodity

• more satisfaction from chocolates than from a bread roll

• less satisfaction from each extra unit we consume of a commodity

• less satisfaction from chocolates than from a bread roll

A marginal producer is one who:

• is just able to cover costs

• runs the firm at a loss

• makes super-normal profits

• purchases in a poor location