Understanding Demand and Supply Concepts

What does the Law of Demand state?

• As price increases, quantity demanded increases

• As price increases, quantity demanded decreases

• As price decreases, quantity supplied decreases

• As income increases, demand decreases

Which of the following best describes the Law of Supply?

• As price increases, quantity supplied decreases

• As price increases, quantity supplied increases

• As price decreases, quantity supplied increases

• As demand increases, supply decreases

What is elasticity of demand?

• The responsiveness of quantity demanded to a change in price

• The total amount supplied at a given price

• The amount of money consumers have

• The number of suppliers in a market

In a supply and demand graph, what is typically shown on the vertical axis?

• Quantity

• Price

• Income

• Time

Which of the following is a non-price factor affecting demand?

• Consumer income

• Price of the good itself

• Quantity supplied

• Cost of production

Which market in the circular flow model is where households sell factors of production?

• Product market

• Factor market

• Goods market

• Service market

A movement along the demand curve is caused by:

• A change in consumer preferences

• A change in the price of the good

• A change in income

• A change in the price of related goods

Which of the following is a non-price factor affecting supply?

• Price of the good

• Technology

• Quantity demanded

• Consumer tastes

What does a rightward shift of the demand curve indicate?

• Decrease in demand

• Increase in demand

• Decrease in supply

• Increase in supply

In the circular flow model, households:

• Sell goods and services

• Buy factors of production

• Sell factors of production

• Set prices