Unit 2 - Supply & Demand Review

What does the law of demand state?

• Everyone has limited income and they will spend it all

• The lower the price, the more people want the good or service

• Services are bought and sold just like goods

• The higher the price, the more people want the good or service

Which of the following is represented by X?

• Percentage Change in Quantity Supplied

• Percentage Change in Quantity Demanded

• Percentage Change in Supply

• Percentage Change in Demand

Select the list of words which completes this statement, in the correct order. A price __________ occurs when the government implements a maximum price and a price __________ occurs when the government implements a price minimum. Price floors tend to create a __________ and price ceilings tend to create a __________.

• Floor, ceiling, shortage, surplus

• Floor, ceiling, surplus, shortage

• Ceiling, floor, shortage, surplus

• Ceiling, floor, surplus, shortage

If suppliers expect prices to rise next year for their product, you would expect

• The demand curve will shift to the left this year

• The quantity demanded will decrease this year

• The supply curve will shift to the left this year

• The supply curve will shift to the right this year

Which of the following is NOT a determinant of demand?

• The price of related goods

• Changes in income

• Consumer expectations

• All are determinants of demand

• None are determinants of demand

Which of the following is the equilibrium price and quantity in Graph 1?

• $2.00, 2,500

• $2.00, 1,500

• $3.00, 2,000

• $3.00, 3,000

Which of the following best defines market equilibrium?

• The point at which supply exceeds demand and prices are stable

• The point at which supply and demand equal each other and prices are stable

• The point at which demand exceeds supply and prices are changing regularly

• The point at which supply and demand equal each other and prices are changing regularly

Refer to Table 2. If the price is $8.00

• A surplus of 30 units would exist and price would tend to drop

• A shortage of 60 units would exist and price would tend to rise

• A shortage of 30 units would exist and price would tend to rise

• A surplus of 60 units would exist and price would tend to drop

Which of the following graphs shows the demand and supply curves for Table 3?

• 
• 

Differentiate a change in quantity demanded from a change in demand.

• A change in quantity demanded creates a new demand curve, while a change in demand is movement along the existing demand curve

• A change in quantity demanded is never driven by price, while a change in demand is always driven by price

• A change in quantity demanded is when consumer expectations delay a purchase, while a change in demand is a change in demographics

• A change in quantity demanded is movement along the existing demand curve, while a change in demand creates a new demand curve