Quiz on Demand, Supply, and Market Equilibrium

What is a firm?

• A person who manages a household

• A market for exchanging goods

• An organization that transforms resources into products

• A consuming unit in an economy

What does the law of demand state?

• As price falls, quantity supplied increases

• As price rises, quantity demanded decreases

• As price falls, quantity demanded decreases

• As price rises, quantity demanded increases

What is the primary role of households in the economy?

• To manage firms and investments

• To supply labor and consume goods

• To produce goods and services

• To regulate market prices

What is a shift of a demand curve?

• A movement along the demand curve

• A decrease in the price of a good

• A change in demand due to a change in original conditions

• A change in quantity demanded due to price change

What is excess demand?

• When firms cannot sell their products

• When market prices are stable

• When quantity demanded exceeds quantity supplied

• When quantity supplied exceeds quantity demanded

What is the definition of market equilibrium?

• When prices are fixed by the government

• When quantity supplied and quantity demanded are equal

• When quantity demanded exceeds quantity supplied

• When quantity supplied is greater than quantity demanded

What are normal goods?

• Goods that are identical products

• Goods for which demand increases when income rises

• Goods for which demand decreases when income rises

• Goods that are substitutes for each other

What does a supply curve illustrate?

• The total demand in the market

• The relationship between price and quantity supplied

• The cost of production for firms

• The relationship between price and quantity demanded

What is the role of the labor market?

• To supply goods and services

• To manage household incomes

• To supply work for wages to firms

• To regulate prices of labor

What is the definition of profit?

• The total revenue from sales

• The difference between revenues and costs

• The total cost of production

• The income earned by households