Understanding Supply and Demand

What is the law of demand?

• As the price of a good increases, the quantity demanded increases.

• As the price of a good increases, the quantity demanded decreases.

• As the price of a good decreases, the quantity demanded decreases.

• There is no relationship between price and quantity demanded.

What is the law of supply?

• As the price of a good increases, the quantity supplied decreases.

• As the price of a good decreases, the quantity supplied increases.

• As the price of a good increases, the quantity supplied increases.

• There is no relationship between price and quantity supplied.

Which of the following factors can cause a shift in the demand curve?

• Changes in consumer income

• Changes in the price of the good itself

• Changes in production technology

• Changes in the number of suppliers

Which of the following factors can cause a shift in the supply curve?

• Changes in consumer preferences

• Changes in the price of the good itself

• Changes in production technology

• Changes in consumer income

What happens to the equilibrium price if there is an increase in demand while supply remains constant?

• The equilibrium price decreases.

• The equilibrium price remains the same.

• The equilibrium price increases.

• The equilibrium price fluctuates randomly.

What happens to the equilibrium quantity if there is a decrease in supply while demand remains constant?

• The equilibrium quantity increases.

• The equilibrium quantity remains the same.

• The equilibrium quantity decreases.

• The equilibrium quantity fluctuates randomly.

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

• Demand for the original good decreases.

• Demand for the original good remains the same.

• Demand for the original good increases.

• Demand for the original good fluctuates randomly.

If the price of a complementary good decreases, what is likely to happen to the demand for the original good?

• Demand for the original good decreases.

• Demand for the original good remains the same.

• Demand for the original good increases.

• Demand for the original good fluctuates randomly.

What is the term for the point where the supply and demand curves intersect?

• Surplus

• Shortage

• Equilibrium

• Disequilibrium

What is a surplus in the context of supply and demand?

• When quantity demanded exceeds quantity supplied

• When quantity supplied exceeds quantity demanded

• When supply and demand are equal

• When there is no demand for a product