Understanding Supply and Demand

If a company raises the price of its product, what happens to customer demand?

• Demand will remain unchanged.

• Demand will decrease.

• Demand will increase.

Answer explanation

When a company raises the price of its product, consumers typically buy less of it, leading to a decrease in demand. This is due to the law of demand, which states that price and quantity demanded are inversely related.

What would happen if you arrived at the restaurant and discovered it was charging one hundred dollars apiece for chicken sandwiches?

• Demand would increase.

• Demand would decrease.

• Supply would increase.

• Supply would decrease.

Answer explanation

If chicken sandwiches cost one hundred dollars each, many customers would likely find the price too high, leading to a decrease in demand for the sandwiches.

If the demand for Christmas trees increases in December, what happens to the price?

• The price increases.

• The price decreases.

• The price remains the same.

Answer explanation

When demand for apples increases while supply remains constant, consumers are willing to pay more for the limited quantity available. This leads to an increase in price.

A ______________________ is someone who makes or sells a product.

• producer

• consumer

• good

• service

If Microsoft prices an item too low, what is likely to happen?

• Demand goes down

• Demand goes up

Answer explanation

If Avery prices an item too low, it becomes more attractive to consumers, leading to a sharp increase in demand as more people want to buy it at the lower price.

If a new shoe company enters the market with lower prices, what is likely to happen to existing shoe companies?

• Prices stay the same

• Prices go up

• Prices will go down

Answer explanation

When a new competitor like Mason's Discount Store enters with lower prices, existing competitors are likely to decrease their prices to remain competitive and retain customers.

To ______________________ means to buy goods and services from sellers in other countries.

• export

• factory

• import

• profit

If a new technology allows a company to make more items, what is the first thing that happens?

• Demand goes up

• Supply goes up

Answer explanation

When a new technology lowers production costs, producers can afford to sell products at lower prices. This increased efficiency typically leads to a decrease in prices, making 'Prices will decrease' the correct choice.

What happened when fidget spinners became popular?

• Demand stayed the same

• Demand went up

• Demand went down

Answer explanation

If consumer preferences shift towards a particular product, it indicates increased interest and desire for that product, leading to an increase in demand for it.

If Singapore puts a tax on imported meat from other countries, what will happen to price in stores?

• Price will drop

• Price will go up

• Price will stay the same

Answer explanation

When a government imposes a tax on imported meat, the cost of importing increases. This typically leads to a decrease in supply, as suppliers may reduce the quantity they are willing to bring to the market.