Demand and Supply Explained Part 2 - Macro Topic 1.5 (Micro Topic 2.2)

Mr. Clifford introduces the concept of supply in economics, using dairy farming as an example. He explains the law of supply, which states that there is a direct relationship between price and quantity supplied. The video discusses the five shifters of supply: price of inputs, number of producers, technology, government involvement, and future expectations. It also covers how supply and demand interact to determine market equilibrium, and the effects of surplus and shortage on the market.

What does the law of supply state about the relationship between price and quantity supplied?

• There is a direct relationship.

• There is no relationship.

• The relationship is unpredictable.

• There is an inverse relationship.

Which of the following is NOT a shifter of supply?

• Government subsidies

• Change in consumer preferences

• Change in the number of producers

• Change in technology

How does an increase in the number of dairy farmers affect the supply of milk?

• It decreases the supply.

• It has no effect on the supply.

• It makes the supply curve vertical.

• It increases the supply.

What happens when the market price is above the equilibrium price?

• The market is in equilibrium.

• A surplus occurs.

• A shortage occurs.

• Demand increases.

In a situation where the price is below equilibrium, what is likely to happen?

• The market will remain stable.

• Supply will exceed demand.

• A shortage will occur.

• A surplus will occur.