Market Demand and Supply

What does the law of demand state?

• Higher prices lead to lower quantity demanded

• Price has no effect on quantity demanded

• Quantity demanded is constant regardless of price

• Higher prices lead to higher quantity demanded

What is a complementary good?

• A good that is always more expensive

• A good that has no relationship with other goods

• A good that is consumed together with another good

• A good that can replace another good

What is the definition of supply?

• The quantity of goods demanded at a given price

• The quantity of goods available for sale at a given price

• The total amount of money spent on goods

• The total number of consumers in the market

What happens to the demand curve when the number of buyers increases?

• It shifts leftward

• It shifts rightward

• It becomes vertical

• It remains unchanged

What is the relationship between income and normal goods?

• Inverse relationship

• No relationship

• Direct relationship

• Variable relationship

What is market equilibrium?

• When quantity supplied exceeds quantity demanded

• When quantity demanded exceeds quantity supplied

• When quantity supplied equals quantity demanded

• When prices are fixed

What is the effect of technological advancement on supply?

• It has no effect on supply

• It decreases production costs

• It increases production costs

• It reduces the number of sellers

What is the law of supply?

• As price decreases, quantity supplied increases

• Price has no effect on quantity supplied

• As price increases, quantity supplied decreases

• As price increases, quantity supplied increases

What is cross elasticity of demand?

• The responsiveness of demand to changes in income

• The responsiveness of demand to changes in the price of related goods

• The responsiveness of supply to changes in price

• The relationship between supply and demand

What happens in a market with excess supply?

• Demand increases

• Equilibrium is achieved

• Prices tend to fall

• Prices tend to rise