Supply and Demand

What is the law of supply and demand?

• The law of supply and demand is the relationship between the cost of production and the price of a good or service.

• The law of supply and demand only applies to luxury goods and not essential items.

• The law of supply and demand is the relationship between the availability of a good or service and the desire for that good or service.

• The law of supply and demand states that the more expensive a good is, the more people will want to buy it.

Explain the concept of equilibrium price.

• Equilibrium price is set by the government

• Equilibrium price is based on consumer preferences

• Equilibrium price is determined by the weather conditions

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

How does an increase in demand affect the price and quantity of a product?

• An increase in demand leads to a lower price and quantity of a product.

• An increase in demand has no effect on the price and quantity of a product.

• An increase in demand leads to a higher price and quantity of a product.

• An increase in demand leads to a decrease in price and increase in quantity of a product.

What factors can cause a shift in the demand curve?

• Global economic trends

• Changes in government regulations

• Weather conditions

• Changes in consumer income, prices of related goods, consumer preferences, population demographics, and consumer expectations.

Describe a situation where there is excess supply in the market.

• A situation where there is excess supply in the market can be observed when the price of a product is set too high, leading to a surplus of unsold goods.

• When demand exceeds supply due to a sudden increase in population.

• When there is a decrease in production costs, causing an increase in supply.

• When the price of a product is set too low, leading to a shortage of goods.

What happens to the price of a product when there is a shortage in the market?

• The price of the product increases.

• The price of the product decreases.

• The price of the product remains the same.

• The price of the product fluctuates.

How does the elasticity of demand impact consumer behavior?

• The elasticity of demand can impact consumer behavior by influencing purchasing decisions based on price changes.

• Elasticity of demand only affects businesses, not consumers

• The elasticity of demand has no impact on consumer behavior

• Consumer behavior is solely influenced by advertising, not elasticity of demand

Discuss the relationship between price and quantity supplied.

• Quantity supplied decreases as price increases.

• The relationship between price and quantity supplied is positive.

• The relationship between price and quantity supplied is negative.

• Price has no impact on quantity supplied.

Explain the concept of price ceilings and price floors.

• Price ceilings are limits on how low a price can be charged, while price floors are limits on how high a price can be set.

• Price ceilings are limits on how high a price can be charged, while price floors are limits on how high a price can be set.

• Price ceilings are limits on how low a price can be charged, while price floors are limits on how low a price can be set.

• Price ceilings are limits on how high a price can be charged, while price floors are limits on how low a price can be set.

What role does scarcity play in the law of supply and demand?

• Scarcity leads to lower prices due to excess supply

• Scarcity affects the availability of goods or services, leading to price increases due to limited supply and high demand.

• Scarcity has no impact on supply and demand

• Scarcity results in a decrease in demand for goods or services