Supply & Demand

What is a market?

• A place where only goods are sold

• A place where only services are offered

• A place where buyers and sellers exchange goods and services

• A place where people only come to socialize

What does voluntary exchange mean?

• Buyers are forced to buy products

• Sellers decide the price without any agreement

• Buyers and sellers willingly decide to make a transaction

• Transactions are made without any consent

Why are competitive markets considered efficient?

• They allocate resources towards their most efficient use

• They guarantee profits for all businesses

• They ensure the highest price for goods

• They favor large corporations over small businesses

What role do price signals play in a market?

• They indicate the quality of a product

• They are irrelevant to market operations

• They determine the salary of employees

• They guide the distribution of resources

What happens when the price of strawberries decreases?

• The quality of strawberries will increase

• Farmers will have an incentive to produce less

• Consumers will buy less strawberries

• Farmers will produce more strawberries

What is the equilibrium price?

• The lowest price at which a seller can sell

• The price where the quantity demanded equals the quantity supplied

• A fixed price set by the government

• The highest price a buyer is willing to pay

How can external factors affect the market?

• They have no effect on the market

• They can change the color of the products

• They can shift the supply and demand curves

• They make products more durable

Why might economists argue against bailing out strawberry farmers?

• Because farmers do not pay taxes

• Because the government does not have enough money

• Because it would be inefficient use of resources

• Because strawberries are not essential

What is one ethical concern with a free market for human organs?

• It would decrease the number of available organs

• It would make organs too expensive for anyone to afford

• It might result in unfair advantage and exploitation

• It could lead to a decrease in organ quality

Why do economists support regulated markets for organ donations?

• To raise the price of organs

• To increase the supply of donated organs

• To make organ trade illegal

• To decrease the quality of organs