Understanding Supply and Demand Concepts

What does the law of supply state?

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

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

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

• The quantity supplied is independent of the price.

What does the law of demand state?

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

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

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

• The quantity demanded is independent of the price.

Which of the following is a determinant of supply?

• Consumer preferences

• Number of sellers

• Income of consumers

• Price of substitutes

Which of the following is a determinant of demand?

• Technology

• Cost of production

• Consumer income

• Number of producers

How does an increase in consumer income affect the demand curve for a normal good?

• The demand curve shifts to the left.

• The demand curve shifts to the right.

• The demand curve becomes steeper.

• The demand curve becomes flatter.

What happens to the supply curve when there is an improvement in technology?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes steeper.

• The supply curve becomes flatter.

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

• Demand decreases.

• Demand increases.

• Demand remains unchanged.

• Demand becomes perfectly elastic.

What effect does an increase in the number of sellers have on the market supply curve?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes steeper.

• The supply curve becomes flatter.

Which of the following would cause a movement along the demand curve rather than a shift?

• A change in consumer income

• A change in the price of the good

• A change in consumer preferences

• A change in the price of a substitute

What is the result of a simultaneous increase in both demand and supply?

• Equilibrium price increases, equilibrium quantity decreases.

• Equilibrium price decreases, equilibrium quantity increases.

• Equilibrium price is indeterminate, equilibrium quantity increases.

• Equilibrium price increases, equilibrium quantity is indeterminate.