Demand & Supply

What is the Law of Demand?

• Quantity demanded increases when price increases

• Quantity demanded increases when price decreases

• Price is not related to quantity demanded

• Both price and quantity demanded always increase

What is a demand schedule?

• A table that shows various prices and the quantity supplied at each price

• A diagram showing only excess demand

• A graphical representation of quantity supplied at all price levels

• A table that shows various prices and the quantity demanded at each price

What is the equilibrium price in a competitive market?

• The highest price buyers are willing to pay

• The lowest price at which sellers are willing to sell

• The price at which quantity demanded equals quantity supplied

• The price that minimizes profit for sellers

Which factor would NOT cause a shift in the demand curve?

• Change in the price of the good itself

• Change in consumer income

• Change in consumer preferences

• Change in the price of substitute goods

What happens to the equilibrium price when there is excess demand?

• It increases until equilibrium is restored

• It decreases until equilibrium is restored

• It stays the same, but quantity adjusts

• It fluctuates unpredictably

What does a rightward shift in the supply curve indicate?

• An increase in the equilibrium price

• An increase in the quantity supplied at each price

• A decrease in the quantity supplied at each price

• A decrease in market demand

Which of these could cause the supply curve for a product to shift left?

• Improved production technology

• Decrease in the price of a complementary product

• Increased number of sellers

• Increase in the price of production inputs

When both demand and supply curves shift simultaneously, the effect on equilibrium price depends on

• Only the shift in the supply curve

• Only the shift in the demand curve

• The relative magnitude of each shift

• The initial market equilibrium

What is the market supply curve?

• The sum of all individual supply curves at each price level

• The individual quantity supplied by a single seller

• The point where the demand and supply curves intersect

• The total amount supplied when price is at its maximum

Which of the following statements about competitive equilibrium is true?

• It occurs when quantity demanded is greater than quantity supplied.

• It is only reached when both curves shift to the right.

• It results in no excess demand or supply at the equilibrium price.

• It can be achieved without demand and supply curves intersecting.