Supply & Demand

What happens to prices when supply exceeds demand?

• There is no effect on prices

• Prices remain the same

• Prices fall

• Prices rise

What is price elasticity of demand?

• The increase of supply when prices rise

• The decrease of demand when supply rises

• The change in demand when prices are static

• The sensitivity of prices in relation to demand

What describes inelastic prices?

• Prices that directly control supply

• Prices that are unaffected by supply

• Prices that have a strong influence on demand

• Prices that have a weak influence on demand

What can cause the price elasticity of a product?

• A decrease in consumer income

• The presence of more affordable alternatives in the market

• A fixed supply of the product

• Government intervention

What is an example of a product with few substitutions?

• Fashion accessories

• Luxury cars

• Smartphones

• Healthcare services

What can negate the principles of supply and demand?

• Transparent pricing

• Monopolies

• High product quality

• Consumer education

What was the public's perception after the terrorist attacks on Sept. 11, 2001, regarding?

• The safety of air travel

• The security of national landmarks

• The stability of the stock market

• The future availability of oil

What happens when interest rates are lowered?

• Asset prices tend to decrease

• More people borrow money

• Economic activity decreases

• The money supply decreases

What is a result of supply and demand-driven inflation?

• Increase in government spending

• Unexpected changes in prices

• Stabilization of the economy

• Decrease in consumer spending

What does the law of supply and demand primarily affect?

• The marketing strategies of companies

• The distribution of wealth

• The price of goods and services

• The quality of goods and services