Demand and Supply

What is the equilibrium price and quantity?

• The equilibrium price is determined by demand only

• The equilibrium price and quantity are always fixed

• The equilibrium price and quantity are determined by the intersection of the supply and demand curves.

• The equilibrium quantity is determined by supply only

Explain the law of demand.

• The law of demand only applies to luxury goods.

• The law of demand explains the relationship between supply and demand.

• The law of demand states that price and quantity demanded are directly proportional.

• The law of demand describes the inverse relationship between price and quantity demanded.

Describe the law of supply.

• Supply is inversely related to demand.

• The law of supply states that quantity supplied is independent of price.

• As the price decreases, the quantity supplied decreases.

• As the price increases, the quantity supplied increases.

What factors can affect the supply of a product?

• Changes in production costs, technology advancements, government regulations, weather conditions, and number of suppliers

• Currency exchange rates, transportation costs, employee salaries

• Global economic trends, political instability, social media influence

• Changes in demand, consumer preferences, advertising strategies

What factors can affect the demand for a product?

• Color of the packaging, brand reputation, weather conditions

• Price, consumer preferences, income levels, advertising, seasonality, availability of substitutes

How does an increase in price affect demand?

• Demand increases

• Demand decreases

• Demand remains constant

• Demand becomes elastic

How does a decrease in price affect supply?

• No effect on supply

• Supply increases

• Supply decreases

• Demand decreases

What happens when supply exceeds demand?

• Supply shortages occur leading to increased prices and competition.

• Supply and demand reach equilibrium resulting in stable prices.

• Increased demand leads to higher prices and scarcity of resources.

• Surplus inventory leads to lower prices and potential waste of resources.

What happens when demand exceeds supply?

• Increased quality of goods or services

• No impact on the market

• Shortage of goods or services, potential price increases, rationing, or waiting lists

• Abundance of goods or services, decreased prices

Explain the concept of elasticity of demand.

• Elasticity of demand is a term used in physics to describe the flexibility of a material

• Elasticity of demand refers to the ability of a product to stretch without breaking

• Elasticity of demand measures the temperature sensitivity of consumers

• The concept of elasticity of demand is a measure of how much the quantity demanded of a good changes in response to a change in its price.