Supply, Demand and Equilibrium

What is equilibrium in supply and demand economics?

• a. The point where supply and demand never meet.

• b. The price where quantity demanded equals quantity supplied.

• c. A state where prices continue to rise indefinitely.

• d. Producers controlling consumer demand.

In economics, what happens when the price of a good increases according to the law of demand?

• a. Quantity demanded decreases

• b. Quantity supplied increases

• c. Consumer preferences shift

• d. Producers lower the price

What does the law of supply state in economics?

• a. There is an inverse relationship between price and quantity supplied.

• b. Producers are willing to supply less as prices increase.

• c. As the price of a good or service increases, producers are willing to supply more of it.

• d. Decreased prices offer more incentive to produce and sell.

What is the demand curve a graphical representation of?

• a. Quantity supplied at different price levels

• b. Quantity demanded at various prices

• c. Consumer income changes over time

• d. Factors influencing the number of sellers

What occurs in a market with a surplus?

• a. Quantity supplied exceeds quantity demanded.

• b. Consumers bid against each other.

• c. The price is below equilibrium.

• d. Shortage creates downward pressure on price.

How do markets tend to naturally move towards equilibrium?

• a. Through the actions of consumers only.

• b. By keeping prices fixed.

• c. Creating a shortage.

• d. Through the actions of both buyers and sellers.

What factor does NOT cause a shift in the demand curve according to supply and demand principles?

• a. Consumer tastes and preferences changes

• b. Number of consumers in the market

• c. Prices of related goods

• d. Expectations about future price changes

If the demand curve shifts right due to increased consumer income, what happens to the equilibrium price and quantity?

• a. Equilibrium price increases, quantity decreases.

• b. Equilibrium price decreases, quantity increases.

• c. Equilibrium price and quantity both increase.

• d. Equilibrium price and quantity both decrease.

What does the upward slope of the supply curve indicate?

• a. As price increases, quantity demanded increases.

• b. As price decreases, producers supply more.

• c. There is an inverse relationship between price and quantity supplied.

• d. Producers are less willing to supply more with increased prices.