Key Concepts of Supply and Demand in Microeconomics

What does the law of demand state about consumer purchasing behavior?

• There is no relationship between price and quantity demanded.

• Consumers buy more at higher prices.

• Consumers buy less at lower prices.

• Consumers buy more at lower prices.

What is a determinant of demand that shifts the demand curve?

• Change in price

• Change in income

• Change in quantity supplied

• Movement along the curve

What causes a movement along the supply curve?

• Change in consumer preferences

• Change in technology

• Change in the number of sellers

• Change in price

What is an example of a non-price determinant of supply?

• Consumer expectations

• Government regulations

• Price of the product

• Change in demand

Which factor does NOT affect the price elasticity of demand?

• The cost of production

• Proportion of income spent on the good

• Availability of substitutes

• Time period considered

What indicates a perfectly elastic demand curve?

• Vertical line

• Horizontal line

• Downward sloping line

• Upward sloping line

What results from setting a price floor above the equilibrium price?

• Decrease in consumer surplus

• No change in market conditions

• A shortage

• A surplus

What is the outcome when a price ceiling is set below the equilibrium price?

• No effect on the market

• Creation of a shortage

• Creation of a surplus

• Increase in producer surplus

How does a tariff on imported goods affect the domestic market?

• Lowers the price of domestic goods

• Decreases the domestic supply

• Increases the domestic demand

• Decreases the quantity imported

What is the effect of a tariff on the price of imported goods?

• Decreases the price

• Increases the price

• Decreases the quantity demanded

• Has no effect on the price