Understanding Markets

A market is a place where:

• goods and services are bought and sold

• people gather to socialize

• animals are kept

• plants are grown

What are the two fundamental economic concepts that govern the behavior of buyers and sellers?

This voluntary exchange happens as consumers are willing to purchase a product (______) and producers are willing to sell the same product (______).

• demand, supply

• supply, demand

• buy, sell

• sell, buy

The definition of demand in economics is:

• The desire to own something and the ability to pay for it

• The amount of money available to spend

• The total market value of all final goods and services produced

• The cost of producing one more unit of a good

What happens to the quantity demanded when the price of a good or service increases?

• It increases

• It decreases

• It remains the same

• It doubles

Fill in the blank: As the price of a good or service decreases, the quantity demanded _________.

• increases

• decreases

• remains the same

• is unaffected

The demand curve illustrates:

• the relationship between price and quantity demanded

• the relationship between supply and demand

• the equilibrium price in a market

• the total revenue generated at different price levels

The demand curve shows the relationship between the price of a product or service and the quantity demanded by consumers in a particular market. True or False?

• True

• False

Do you know what a Ceteris paribus assumption is?

• Yes, it is an assumption where all other variables are held constant.

• No, it is a type of economic model.

• Yes, it is a statistical method for data analysis.

• No, it is a financial term for risk assessment.

What is the extension of demand?