Supply and Demand Principles

The video introduces the concepts of supply and demand, explaining how they determine prices in markets. It covers the Law of Demand, where higher prices lead to lower demand, and the Law of Supply, where higher prices encourage more supply. Market equilibrium is discussed, where supply meets demand, and the effects of surpluses and shortages are explained. The video also covers shifts in demand and supply curves due to external factors and provides real-world examples like the housing market and gasoline prices. Understanding these concepts helps in making informed economic decisions.

What is the primary factor that guides prices in markets worldwide?

• Production costs

• Supply and demand

• Consumer preferences

• Government regulations

According to the Law of Demand, what happens when the price of a good decreases?

• The quantity demanded increases

• The quantity supplied decreases

• The quantity supplied increases

• The quantity demanded decreases

What does a downward-sloping demand curve indicate?

• Higher prices lead to higher quantities demanded

• Lower prices lead to lower quantities demanded

• Lower prices lead to higher quantities demanded

• Higher prices lead to higher quantities supplied

What does the Law of Supply state about the relationship between price and quantity supplied?

• Price has no effect on quantity supplied

• As price increases, quantity supplied increases

• As price decreases, quantity supplied increases

• As price increases, quantity supplied decreases

What does an upward-sloping supply curve represent?

• Lower prices encourage production

• Higher prices discourage production

• Price changes have no effect on production

• Higher prices encourage production

What is market equilibrium?

• The point where prices are highest

• The point where supply equals demand

• The point where demand exceeds supply

• The point where supply exceeds demand

What occurs when the price is set above the equilibrium price?

• A surplus

• A shortage

• Increased demand

• Market equilibrium

What happens to the demand curve when a celebrity endorses a product?

• It shifts to the right

• It remains unchanged

• It becomes vertical

• It shifts to the left

What is the effect of a technological breakthrough on the supply curve?

• It shifts to the left

• It shifts to the right

• It remains unchanged

• It becomes horizontal

How do supply and demand principles apply to the housing market?

• They only affect rental prices

• They explain why some cities have higher housing costs

• They have no effect on housing prices

• They only apply to commercial properties