Econ Unit 2 Supply and Demand

What is the basic principle of law of demand

• If the price is higher, people will buy more of a good

• Everyone has a limited income that they will spend

• The lower the price, the more people will buy

• Services and goods are purchased in the same way

The law of supply states that producers are willing to sell

• more of a good or service at higher prices than at lower prices

• less of a good or service at higher prices than at lower prices

• less of a good when there is more demand

• more of a good when there is less demand

What is supply

• The desire to own something and the ability to pay for it

• The willingness and ability of producers to sell a product at different price points

• Factors that cause the demand for a product to change

• a graph of the quantity supplied of a good at different prices

What is demand

• Factors that cause the supply of a product to change

• The willingness and ability of producers to sell a product at different prices

• Consumers buy more of a product when it's price decreases and less when it's price increases

• The desire (willingness) to own something and the ability to pay for it

When the selling price of a good goes up, what happens to the quantity demanded

• it increases

• It does not change

• It decreases

• It increases consumer income

When the selling price of a good goes down, what happens to the quantity supplied

• It increases

• It does not change

• It decreases

• It increases the cost of production

The feeling of having less money when the price of good rise is.....

• a shift in demand

• a shift in supply

• the income effect

• the substitution effect

When consumers react to an increase in a good's price by consuming less of that good and more of other goods is.....

• a shift in demand

• a shift in supply

• the income effect

• the substitution effct

An increase or decrease in demand that results from a factor that causes demand for a product to change is.....

• a shift in demand

• a shift in supply

• the income effect

• the substitution effect

Buying Tuna instead of hamburger meand that Tuna is a _______ for hamburger

• Substitute goods

• economic goods

• inferior goods

• complementary goods