Economics: Supply and Demand

What is the key concept of markets in economics?

• Voluntary exchange

• Monopoly

• Government control

• Barter system

What does the law of demand state?

• When the price goes up, people buy more

• Price has no effect on quantity demanded

• When the price goes down, people buy less

• Demand is always constant

What does the law of supply state?

• Supply is always constant

• When the price goes down, producers supply more

• When the price goes up, producers supply less

• Price has no effect on quantity supplied

What happens when the demand for a product decreases?

• Equilibrium price and quantity increase

• Equilibrium price and quantity decrease

• Equilibrium price increases and quantity decreases

• Equilibrium price decreases and quantity increases

What external force can shift the supply curve for strawberries to the left?

• Increase in consumer income

• Warmer temperatures

• Colder temperatures

• Decrease in production costs

What is the equilibrium price and quantity on the supply and demand graph?

• Price is average and quantity is average

• Price is low and quantity is high

• Price is high and quantity is low

• Price and quantity are not related

What caused the dramatic fall in retail gas prices in the United States in 2014?

• Increased demand and decreased supply

• Decreased demand and increased supply

• Increased demand and increased supply

• Decreased demand and decreased supply

Why do economists generally support creating kidney exchanges?

• To alleviate the shortage of donated kidneys

• To increase the shortage of donated kidneys

• To regulate the market for human organs

• To decrease the supply of donated kidneys

What is the downside of an unregulated market for human kidneys?

• Incentive for people to steal and sell kidneys

• Increased supply of donated kidneys

• Decreased shortage of donated kidneys

• Altruistic donations and human trafficking

What is the main reason for economists not pushing opinions about prices?

• Buyers always consider a low price to be fair

• Sellers always consider a low price to be unfair

• Voluntary exchange suggests that the price is there for a reason

• Prices are always regulated by the government