BM: 3-2 The Principles of Supply and Demand

What is the Law of Supply and Demand?

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

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

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

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

What is a surplus in supply and demand?

• B. When the quantity supplied equals the quantity demanded

• D. When the quantity supplied and demanded are both zero

• C. When the quantity supplied exceeds the quantity demanded

• A. When the quantity demanded exceeds the quantity supplied

What is price elasticity?

• 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 quality of a product changes based on changes in the price of the product

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

• D. The degree to which the location of a product changes based on changes in the price of the product

What is inelastic demand?

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

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

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

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

How does competition affect supply and demand?

• D. It has no impact on supply and demand

• C. It puts pressure on prices

• B. It leads to a seller's market

• A. It leads to a buyer's market

What is a buyer's market?

• D. A situation when economic conditions have no impact on buyers and sellers

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

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

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

What is a free market system?

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

• 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

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

How is the government involved in a free market system?

• A. The government has no involvement in a free market system

• B. The government regulates businesses to ensure safety and well-being of the citizenry

• D. The government determines the wages of workers in a free market system

• C. The government controls the prices of goods and services

What is a monopoly?

• B. A market where multiple companies control the supply of a good or service

• D. A market where there is no control over the supply of a good or service

• C. A market where the government controls the supply of a good or service

• A. A market where one company controls the supply of a good or service

What is equilibrium in supply and demand?

• D. A momentary state where the quantity supplied and demanded are both zero

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

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

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