G8 Introduction to Supply and Demand: How Prices are Determined

What is demand? Demand refers to the quantity of a good or service that consumers are willing and able to buy at various prices during a specific period.

• True

• False

Which of the following is NOT a key point about demand?

• A) Willingness to Buy

• B) Ability to Buy

• C) Price

• D) Advertising

Which effect explains why consumers may switch to cheaper alternatives if the price of a product rises?

• Income Effect

• Substitution Effect

• Price Effect

• Demand Effect

If the price of a product rises and consumers' purchasing power decreases, which effect is this?

• Substitution Effect

• Income Effect

• Price Effect

• Demand Effect

Which of the following is NOT a factor affecting demand (other than price)?

• Consumer Income

• Tastes and Preferences

• Prices of Related Goods

• Weather

Fill in the blank: If incomes rise, people can afford to buy more goods and services, ________ demand for normal goods.

• increasing

• decreasing

• eliminating

• ignoring

What happens to the demand for a substitute good if the price of the original good rises?

• Demand for the substitute good increases

• Demand for the substitute good decreases

• Demand for the substitute good stays the same

• Demand for the original good increases

Expectations about future prices or availability can influence current demand.

• True

• False

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at various prices during a specific period.

• True

• False

Which of the following is NOT a key point about supply?

• Willingness to Sell

• Ability to Sell

• Price

• Consumer Preferences

• Time Period