BM: 3-2 The Principles of Supply and Demand

What is the Law of Supply and Demand?

• C. A theory that explains the interaction between buyers and sellers based on quantity

• A. A theory that explains the interaction between buyers and sellers based on price

• D. A theory that explains the interaction between buyers and sellers based on location

• B. A theory that explains the interaction between buyers and sellers based on quality

What is a surplus in supply and demand?

• D. When the quantity demanded equals the quantity supplied

• C. When the quantity supplied exceeds the quantity demanded

• A. When the quantity demanded exceeds the quantity supplied

• B. When the quantity supplied equals the quantity demanded

What is price elasticity?

• D. The degree to which the supply for a product changes based on changes in the quality of the product

• A. The degree to which the supply for a product changes based on changes in the price of the product

• B. The degree to which the demand for a product changes based on changes in the price of the product

• C. The degree to which the demand for a product changes based on changes in the quality of the product

What is a buyer's market?

• D. A situation when economic conditions make it unfavorable to both buyers and sellers

• C. A situation when economic conditions make it favorable to both buyers and sellers

• A. A situation when economic conditions make it favorable to buyers versus sellers

• B. A situation when economic conditions make it favorable to sellers versus buyers

What is a free market system?

• A. An economic system where production, wages, and prices are determined by the government

• D. An economic system where production, wages, and prices are determined by the sellers

• B. An economic system where production, wages, and prices are determined by supply and demand

• C. An economic system where production, wages, and prices are determined by the consumers

What is inelastic demand?

• D. There is a small or no change in the supply of a product based on changes in the price

• C. There is a large change in the supply of a product based on changes in the price

• B. There is a small or no change in the demand of a product based on changes in the price

• A. There is a large change in the demand of a product based on changes in the price

How does competition affect supply and demand?

• A. It leads to a decrease in prices due to excess supply

• D. It has no effect on supply and demand

• B. It leads to an increase in prices due to excess demand

• C. It puts pressure on prices as competitors seek to make sales

What is equilibrium in supply and demand?

• A. A momentary state where the quantity supplied exceeds the quantity demanded

• B. A momentary state where the quantity demanded exceeds the quantity supplied

• C. A momentary state where the quantity supplied equals the quantity demanded

• D. A momentary state where the quantity demanded equals the quantity supplied

What is a seller's market?

• C. A situation when economic conditions make it favorable to both buyers and sellers

• A. A situation when economic conditions make it favorable to buyers versus sellers

• D. A situation when economic conditions make it unfavorable to both buyers and sellers

• B. A situation when economic conditions make it favorable to sellers versus buyers

How is the government involved in a free market system?

• A. The government has no involvement in regulating businesses

• B. The government is involved in regulating businesses to ensure safety and well-being

• C. The government is involved in setting prices for products and services

• D. The government is involved in controlling the supply and demand of products