Supply and Demand Quiz

What is scarcity in economics?

• When supply exceeds demand

• When there are limited resources but unlimited wants

• When demand for a product decreases

• When producers make too many goods

According to the law of supply and demand, what happens when a product becomes scarce?

• Prices decrease to encourage sales

• Prices remain constant

• Prices increase as consumers compete for the limited supply

• Consumers lose interest in the product

How does scarcity impact the equilibrium price of a product?

• The price falls below equilibrium

• The price rises above equilibrium

• The price remains unchanged

• The government always sets the price

If a producer sets the price of a product too low, what is the likely result?

• A) A surplus

• B) A shortage

• C) Increased production

• D) Decreased demand

What action might a business take if there is a shortage of a product due to scarcity?

• Lower prices to attract more buyers

• Increase prices to balance supply and demand

• Stop producing the product

• Give away products for free

What is an example of scarcity affecting pricing strategies?

• A) A store discounts old inventory to clear space

• B) Gas prices rise due to a disruption in oil production

• C) A company bundles two products for a discount

• D) A store buys extra inventory to prepare for a sale

What occurs at the equilibrium price?

• Demand is greater than supply

• Supply is greater than demand

• The quantity supplied equals the quantity demanded

• Prices fluctuate unpredictably

If the government sets a price floor above the equilibrium price, what is likely to happen?

• A) A shortage will occur

• B) A surplus will occur

• C) The price will drop to match demand

• D) The market will correct itself automatically