Supply and Demand

What is the law of demand?

• The law of demand states that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and vice versa.

• The law of demand states that the quantity demanded remains constant regardless of price changes

• The law of demand states that as the price of a good decreases, the quantity demanded decreases

• The law of demand states that as the price of a good increases, the quantity demanded also increases

Explain the law of supply.

• The law of supply states that as the price of a good or service increases, the quantity supplied by producers decreases.

• The law of supply states that as the price of a good or service increases, the quantity supplied by producers also increases, ceteris paribus.

• The law of supply states that as the price of a good or service decreases, the quantity supplied by producers increases.

• The law of supply states that as the price of a good or service remains constant, the quantity supplied by producers also remains constant.

How do changes in price affect demand?

• Price has no impact on demand.

• Price and demand have a direct relationship.

• Changes in price do not affect demand.

• Price and demand have an inverse relationship.

What factors can cause a shift in the demand curve?

• Changes in government regulations

• Weather conditions

• Global economic trends

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

What factors can cause a shift in the supply curve?

• Changes in production costs, technology, government policies, taxes, subsidies, and the number of suppliers.

• Consumer preferences

• Weather conditions

• Changes in demand

Define equilibrium price.

• Price set by the government

• Price determined by consumer preferences

• Price at which quantity demanded equals quantity supplied.

• Price at which demand exceeds supply

What happens when the price is above the equilibrium price?

• Producers will reduce the quantity supplied to match the equilibrium price.

• There will be a surplus of the good or service, leading to a decrease in price towards the equilibrium price.

• Consumers will be willing to pay more for the good or service, resulting in increased demand.

• There will be a shortage of the good or service, leading to an increase in price towards the equilibrium price.

What happens when the price is below the equilibrium price?

• Consumers stop buying the product.

• Surpluses occur in the market.

• Prices remain stable.

• Shortages occur in the market.

How does scarcity affect supply and demand?

• Scarcity has no impact on supply and demand

• Scarcity results in lower prices due to oversupply

• Scarcity causes demand to decrease while supply increases

• Scarcity leads to higher prices as demand exceeds supply.

Give an example of a real-life situation where supply and demand interact.

• Supermarket pricing

• Real estate market

• Weather forecasting

• Traffic congestion