Supply and Demand

The video tutorial explains the fundamental economic concepts of supply and demand. It begins by defining these terms and their significance in determining the price of goods and services. The tutorial delves into the law of demand, illustrating how price changes affect consumer behavior, and introduces the substitution and income effects. It then shifts focus to supply, explaining how producers decide the quantity to offer based on price changes. The video concludes with a discussion on market equilibrium, where supply and demand intersect, and how shifts in these forces can lead to new equilibrium levels.

What is the primary factor that determines the price of a good or service?

• The cost of production

• Consumer preferences

• Supply and demand

• Government regulations

According to the law of demand, what happens when the price of a product decreases?

• The product becomes a substitute

• Consumers buy less of it

• Consumers buy more of it

• The product's quality improves

What is the substitution effect?

• Buying more of a product when its price decreases

• Switching to a similar product when the price of the original rises

• Increasing demand for a product due to advertising

• Buying less of a product when income decreases

What does a demand schedule illustrate?

• The relationship between price and quantity supplied

• The equilibrium price in a market

• The relationship between price and quantity demanded

• The cost of production for a good

According to the law of supply, what do producers do when the price of a good increases?

• Increase the supply

• Decrease the supply

• Maintain the same supply

• Stop producing the good

What is a supply schedule?

• A table showing the quantity demanded at various prices

• A list of production costs

• A graph showing the demand curve

• A table showing the quantity supplied at various prices

What is the equilibrium price?

• The price at which supply exceeds demand

• The price at which demand exceeds supply

• The price at which quantity demanded equals quantity supplied

• The price set by the government