Ch 7 Demand and Supply

The interaction of supply and demand determines the

• elasticity

• price ceiling

• equilibrium price

• marginal utility

When the price of a good is too high for consumers, they look for

• inelastic demand

• substitutes

• inflation

• luxury items

The quantity demanded of a product is affected by

• output versus input.

• surplus quantities.

• price

• shortages

Diminishing marginal utility refers to the fact that

• demand declines as income falls.

• additional satisfaction declines as additional units of an item are consumed.

• people have unlimited needs.

• in equilibrium, supply equals demand.

According to the law of supply, higher prices prompt producers to

• increase demand.

• maintain current production.

• produce less.

• produce more.

If the price of an item rises, quantity demanded usually

• reflects the presence of new suppliers.

• rises

• remains unchanged.

• falls

The principle that states that the more you have of something, the less satisfaction you will get from an additional unit is the

• law of demand.

• law of diminishing marginal utility.

• law of equilibrium.

• price elasticity.

Demand for one particular brand of coffee is probably

• elastic

• inelastic

Generally, the more substitutes there are for a good, the

• more elastic the demand.

• less valuable it is.

• more complements there are.

• less prices change.

If the price of a product is above its equilibrium price, the result is a

• surplus

• shortage