Supply and Demand Review

Define "demand"

• How much of a product sellers are willing and able to sell

• How much of a product buyers are willing and able to buy

• How much the government collects in taxes when a product is sold

• How much it costs to produce a product

• How much a third party benefits when a product is consumed

Define "supply"

• How much of a product sellers are willing and able to sell

• How much of a product buyers are willing and able to buy

• How much the government collects in taxes when a product is sold

• How much it costs to produce a product

• How much a third party benefits when a product is consumed

On a supply and demand graph, the y (vertical) axis is labeled ____________, while the x (horizontal) axis is labeled ____________.

• supply; demand

• demand; supply

• price; quantity

• quantity; price

According to the law of demand ______________

• people tend to buy the same amount of a product regardless of its price

• people tend to buy less of a product when the price goes up

• people tend to buy more of a product when the price goes up

• people tend to buy less of a product when the price goes down

According to the law of supply, ___________.

• sellers tend to sell the same quantity of a product regardless of its price

• sellers tend to sell less of a product when the price goes up

• sellers tend to sell more of a product when the price goes down

• sellers tend to sell more of a product when the price goes up

Suppose that at the current price, sellers are willing and able to sell less of a product than buyers are willing and able to buy. (i.e. There is a "shortage" in the market). What will likely happen in this market?

• demand will shift to the right

• supply will shift to the left

• price will fall

• price will rise

Suppose that at the current price, sellers are willing and able to sell more of a product than buyers are willing and able to buy. (i.e. There is a "surplus" in the market). What will likely happen in this market?

• demand will shift to the right

• supply will shift to the left

• price will fall

• price will rise

In a free and competitive market, price will tend to move towards the _____________ price, the price at which quantity demanded equals quantity supplied.

• retail

• regulated

• equilibrium

• perfect

• government-mandated

If demand for a product increases, the equilibrium price will __________ and quantity will ___________.

• rise; rise

• rise; fall

• fall; rise

• fall; fall

• fall; remain the same

If supply of a product increases, the equilibrium price will __________ and quantity will ___________.

• rise; rise

• rise; fall

• fall; rise

• fall; fall

• remain the same; rise